CP bids for Norfolk Southern

Article Excerpt

CANADIAN PACIFIC RAILWAY $190.97 (Toronto symbol CP; Shares outstanding: 152.9 million; Market cap: $29.4 billion; TSINetwork Rating: Above Average; Yield: 0.7%; www.cpr.ca) has offered to buy U.S. railway Norfolk Southern (New York symbol NSC). The combined company would be North America’s largest railway, with more than 56,000 kilometres of track. Buying Norfolk would also give CP greater access to ports on the U.S. Gulf Coast and Atlantic Ocean. Norfolk shareholders would receive $46.72 U.S. a share in cash and 0.348 of a CP share (or roughly 50% in cash and 50% in stock). That would give them 41% of the combined firm. Based on CP’s current share price, the offer is worth a total of $29.4 billion U.S., or 28% more than CP’s market cap (the value of all outstanding shares) of $30.6 billion. CP also feels the merger will let it cut the combined firm’s costs by $1.8 billion U.S. a year. Norfolk is currently trading at 4.6% below the…