OMAHA, Neb. (AP) — Canadian Pacific said Monday that it is ending its nearly $30 billion takeover bid for Norfolk Southern, less than six months after it offered to buy the rival railroad.
Norfolk Southern had rejected Canadian Pacific’s bids, saying that the Calgary, Canada-based railroad needed to raise its offer and convince a rail regulator that the structure of the deal could be approved.
Canadian Pacific is dropping the deal before the federal Surface Transportation Board could rule on its proposed structure and before Norfolk Southern shareholders vote whether to support merger talks.
Canadian Pacific CEO E. Hunter Harrison said Monday that there was “no clear path to a friendly merger at this time.”
A deal would have expanded Canadian Pacific’s rail network across the U.S., and many observers believed it would have triggered a wave of railroad mergers.
Canadian Pacific operates railroads in Canada and parts of the U.S. Midwest and South, while Norfolk Southern of Norfolk, Virginia, operates railroads along the East Coast, Midwest and South. Canadian Pacific first offered to buy Norfolk Southern in November.
Canadian Pacific officials had previously said that they would consider repurchasing stock or paying additional dividends if this deal fell apart.
Throughout the merger conversations, Norfolk Southern executives had argued that its shareholders and customers would be better off if the railroad remained independent.
Now Norfolk Southern will have chance to deliver on its own improvement plan that includes cutting $130 million in costs this year and creating more than $650 million in annual cost savings by 2020 while improving service.
Canadian Pacific officials had said they planned to cut roughly $1.8 billion in annual costs from the combined railroad to create a more efficient operation.
Shares of Norfolk Southern Corp. slipped $1.28, or 1.6 percent, to $80.21 in Monday morning trading. Shares of Canadian Pacific Railway Ltd. gained $5.33 or 4 percent, to $140.12 in morning trading.