Canadian Pacific Exploring Norfolk Southern Takeover: Report - Global Trade Magazine
  November 10th, 2015 | Written by

Canadian Pacific Exploring Norfolk Southern Takeover: Report

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  • North American Class I railroads have shrunk from 56 to six since railroads were deregulated in 1980.
  • It is questionable whether a Canadian Pacific-Norfolk Southern merger would meet with regulatory approval.
  • BNSF’s bid to buy Canadian National in 2000 went nowhere after opposition from U.S. regulators.
  • In September, NS completed the acquisition of a Delaware & Hudson line from Canadian Pacific.

Canadian Pacific Railway Ltd., the second-biggest railroad in Canada, is in preliminary talks to take over U.S. carrier Norfolk Southern Corp., Bloomberg is reporting.

Canadian Pacific is also raising financing for the deal, according to the same article. Both railroads have declined to comment on the report.

Canadian Pacific held merger talks with CSX Corp. last year which proved fruitless.

The deal, if it comes about, would represent a major consolidation of the North American rail industry, which has seen the number of Class I railroads shrink from 56 to six since railroads were deregulated in 1980.

Norfolk Southern and CSX operate in the eastern half of the United States, while Union Pacific and Burlington Northern Santa Fe (BNSF) operate in the western half. The Class Is also include Canada’s two main Canadian freight railways, Canadian National and Canadian Pacific, both of which also have holdings in the United States.

Given the competitive landscape, some commentators have questioned whether a Canadian Pacific-Norfolk Southern merger would meet with regulatory approval.

CSX CEO Mike Ward is on record as saying that mergers between Class I railroads could disrupt freight traffic and that regulators would likely be concerned.

BNSF’s bid to buy Canadian National in 2000 went nowhere after the U.S. Surface Transportation Board opposed the transaction.

Norfolk Southern operates 20,000 route miles of track in 22 eastern states, and serves all of the region’s major container ports. It connects with the western railroads in Chicago and Kansas City, two cities also served by Canadian Pacific.

Canadian Pacific’s network reaches across southern Canada from Montreal to Vancouver, and also includes assets in the U.S. midwest that connect to a rail hub in Chicago.

Intermodal shipments comprise 22 percent of Norfolk Southern’s revenue, followed by coal, at 21 percent. Canadian Pacific’s earns 28 biggest of its revenue transporting industrial and consumer products.

In September Norfolk Southern completed the acquisition of 282 miles of the Delaware & Hudson Railway Co.’s line between Sunbury, Pa., and Schenectady, N.Y., from Canadian Pacific in a $214.5 million deal.

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