Railroads Stocks Spiking On Canadian Pacific-Norfolk Southern Merger Report

On Monday afternoon, a Bloomberg article informed that Canadian Pacific Railway, the second-largest biggest railroad in Canada, was considering a takeover of Norfolk Southern Corp., a big-cap U.S. carrier.

The article assured that, in a move aimed at consolidating the North American industry, Canadian Pacific was raising financing and had “held early-stage merger talks with Norfolk Southern.”

Related Link: Norfolk Southern Announces Service Changes In Response To Upcoming Positive Train Control

However, the note added, “Discussions are preliminary and talks may not progress or lead to a deal,” sources familiar with the issue said. Representatives for both companies involved declined to comment on the issue.

Author Ed Hammond noted that the acquisition of Norfolk Southern, the second-largest railroad in the Eastern region of the U.S., “would revive Canadian Pacific’s effort to build a transcontinental carrier after talks with CSX Corp. failed last year.”

Hammond continued, “In floating the idea of a CSX tie-up, Canadian Pacific Chief Executive Officer Hunter Harrison upended the long-held view in the industry that it was fruitless to even discuss another merger because regulators would object.”