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US Senators join opponents of CP takeover of Norfolk Southern railway
TWO members of the US Senate antitrust subcommittee has raised their concerns over North America railway operator Canadian Pacific's (CP) proposed takeover of Norfolk Southern Corp. (NS), claiming it could "limit the ability of the STB to protect competition," wrote Republican Senators Mike Lee and Democrat Senator Amy Klobuchar in a letter to the United States attorney general's office.
CP last week sent a petition to the US Surface Transportation Board (STB) asking for a declaratory ruling confirming the viability of a proposed voting trust structure the company has suggested as part of the acquisition.
Under CP's voting trust plan, CEO Hunter Harrison would sell his shares in Canadian Pacific and become chief executive of Norfolk Southern. Current chief operating officer Keith Creel would then head CP, reported the Wall Street Journal.
The Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights said the voting trust could allow Mr Harrison to "implement a commercial strategy at Norfolk Southern different from that envisioned by the current Norfolk Southern management."
Opposition to the merger has also been raised by FedEx, CSX, Union Pacific and BNSF Railway, other members of Congress, rail unions, NS customers, and FedEx rival UPS, who have said a merger would cause further consolidation in the industry that would lead to a decrease in competition and service levels, reported American Shipper.
CP has repeatedly argued its proposed takeover of NS would enhance competition, increase service levels for its customers and drive economic growth, but the number four US railway operator has rejected three separate cash-and-stock bids valued at US$30 billion, deeming them "grossly inadequate" and unlikely to win approval from the STB.
The STB said applicants must address any potential environmental impact of a merger, and submit both a Safety Integration Plan and a Service Assurance Plan to address potential adverse service effects during the merger implementation. Any major merger applicants would also be subject to formal STB oversight for a minimum of five years following the integration.
CP last week sent a petition to the US Surface Transportation Board (STB) asking for a declaratory ruling confirming the viability of a proposed voting trust structure the company has suggested as part of the acquisition.
Under CP's voting trust plan, CEO Hunter Harrison would sell his shares in Canadian Pacific and become chief executive of Norfolk Southern. Current chief operating officer Keith Creel would then head CP, reported the Wall Street Journal.
The Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights said the voting trust could allow Mr Harrison to "implement a commercial strategy at Norfolk Southern different from that envisioned by the current Norfolk Southern management."
Opposition to the merger has also been raised by FedEx, CSX, Union Pacific and BNSF Railway, other members of Congress, rail unions, NS customers, and FedEx rival UPS, who have said a merger would cause further consolidation in the industry that would lead to a decrease in competition and service levels, reported American Shipper.
CP has repeatedly argued its proposed takeover of NS would enhance competition, increase service levels for its customers and drive economic growth, but the number four US railway operator has rejected three separate cash-and-stock bids valued at US$30 billion, deeming them "grossly inadequate" and unlikely to win approval from the STB.
The STB said applicants must address any potential environmental impact of a merger, and submit both a Safety Integration Plan and a Service Assurance Plan to address potential adverse service effects during the merger implementation. Any major merger applicants would also be subject to formal STB oversight for a minimum of five years following the integration.
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