CALGARY, Dec. 8, 2015
/PRNewswire/ - Canadian Pacific (TSX:CP) (NYSE:CP) today announced
it has sent a revised offer letter to Norfolk Southern Corp. (NS)
that is financially more attractive and dramatically reduces the
regulatory uncertainty for NS shareholders.
Below is the full text of the revised offer letter sent to NS
CEO James Squires:
Mr. James A.
Squires
Chairman and Chief Executive Officer
Norfolk Southern Railway Company
Three Commercial Place
Norfolk, VA 23510
Dear Jim,
In order to address the concerns you have publicly expressed, we
have improved our prior offer by: 1) dramatically reducing the
regulatory risk for NSC's shareholders, 2) making it substantially
more financially attractive by increasing NSC shareholders'
ownership of the pro forma company from 41% to 47%, and 3) agreeing
to complete due diligence in no more than three weeks while
contemporaneously negotiating definitive documentation.
To alleviate any regulatory concerns that NSC shareholders might
have, we are prepared to close the transaction into a voting trust.
By utilizing a voting trust, NSC shareholders will receive a
substantial cash payment and shares in a new investment grade
company which would be listed on both the NYSE and TSX. Based on
extensive work done by our lead transaction counsel, Simpson
Thacher, and our United States and
Canadian regulatory counsel, Stinson
Leonard Street and Bennett
Jones, we anticipate the closing and listing of shares to
occur on May 1, 2016.
At the closing of the transaction, NSC shareholders will receive
$32.86 in cash and 0.451 shares of
stock in a new company which will own NSC and Canadian Pacific. We
estimate the total value of the stock and cash consideration to NSC
shareholders to be worth $125 to $140
per share at the closing of the transaction in May 2016. The revised transaction offers a 37% to
53% premium to today's closing price of $91.52 and a 58% to 77% premium to the unaffected
price of $79.14 per share.
We remain ready to work with you and your team immediately on
this transformational opportunity.
This offer has received the unanimous support of our Board of
Directors.
Yours sincerely,
____________________________
_____________________________
E. Hunter Harrison,
CEO
Andrew F. Reardon, Chairman
Canadian Pacific
Railway
Canadian Pacific Railway
Forward Looking Statement
This news release contains certain forward-looking information
within the meaning of applicable securities laws relating, but not
limited, to CP's proposal to NS regarding a possible business
combination, the anticipated results and benefits of the proposed
transaction and matters relating to regulatory approvals and
changes. This forward-looking information also includes, but is not
limited to, statements concerning expectations, beliefs, plans,
goals, objectives, assumptions and statements about possible future
events, conditions, and results of operations or performance.
Forward-looking information may contain statements with words or
headings such as "financial expectations", "key assumptions",
"anticipate", "believe", "expect", "plan", "will", "outlook",
"should" or similar words suggesting future outcomes.
Undue reliance should not be placed on forward-looking
information as actual results may differ materially from the
forward-looking information. Forward-looking information is not a
guarantee of future performance. By its nature, CP's
forward-looking information involves numerous assumptions, inherent
risks and uncertainties that could cause actual results to differ
materially from the forward-looking information, including but not
limited to the following factors: the ability of the parties to
agree to the terms of a proposed transaction; the ability of the
parties to obtain the required regulatory approvals; the ability to
recognize the financial and operational benefits of the
transaction; changes in business strategies; general North American
and global economic, credit and business conditions; risks in
agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities; the
effects of competition and pricing pressures; industry capacity;
shifts in market demand; changes in commodity prices; uncertainty
surrounding timing and volumes of commodities being shipped via CP;
inflation; changes in laws and regulations, including regulation of
rates; changes in taxes and tax rates; potential increases in
maintenance and operating costs; uncertainties of investigations,
proceedings or other types of claims and litigation; labour
disputes; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; currency and interest rate fluctuations;
effects of changes in market conditions and discount rates on the
financial position of pension plans and investments; and various
events that could disrupt operations, including severe weather,
droughts, floods, avalanches and earthquakes as well as security
threats and governmental response to them, and technological
changes. The foregoing list of factors is not exhaustive.
These and other factors are detailed from time to time in
reports filed by CP with securities regulators in Canada and the United States. Reference
should be made to "Management's Discussion and Analysis" in CP's
annual and interim reports, Annual Information Form and Form 40-F.
Readers are cautioned not to place undue reliance on
forward-looking information. Forward-looking information is based
on current expectations, estimates and projections and it is
possible that predictions, forecasts, projections, and other forms
of forward-looking information will not be achieved by CP. Except
as required by law, CP undertakes no obligation to update publicly
or otherwise revise any forward-looking information, whether as a
result of new information, future events or otherwise.
Rule 425 Disclosure
This announcement is neither an
offer to purchase or exchange nor a solicitation of an offer to
sell securities. Subject to future developments, additional
documents regarding the proposed transaction may be filed with the
SEC. Investors and security holders are urged to read such
disclosure documents regarding the proposed transaction, if and
when they become available, because they will contain important
information. Investors and security holders may obtain a free
copy of the disclosure documents (when they are available) and
other documents filed by CP with the SEC at the SEC's website at
www.sec.gov. The disclosure documents and these other documents may
also be obtained for free from CP at http://www.cpr.ca/en/investors
or by directing a request to Canadian Pacific Railway Limited, 7550
Ogden Dale Road S.E., Calgary, Alberta,
Canada, T2C 4X9, Attention: Office of the Corporate
Secretary.
CP and its directors, executive officers and other employees may
be deemed to be participants in any solicitation of CP or NS
shareholders in connection with the proposed transaction.
Information about CP's executive officers and directors is
available in CP's Annual Report on Form 40-F for the year ended
December 31, 2014, which was filed
with the SEC on February 23, 2015.
Additional information about the interests of potential
participants will be included in any proxy statement filed in
connection with the proposed transaction.
About Canadian Pacific
Canadian Pacific
(TSX:CP)(NYSE:CP) is a transcontinental railway in Canada and the
United States with direct links to eight major ports,
including Vancouver and
Montreal, providing North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit cpr.ca to see the rail
advantages of Canadian Pacific.
SOURCE Canadian Pacific