UPS Opposes Rail Merger Between Norfolk Southern, Canadian Pacific--Update
February 11 2016 - 1:55PM
Dow Jones News
By Laura Stevens
United Parcel Service Inc., one of the nation's largest rail
customers, became the latest company to oppose a merger between
Canadian Pacific Railway Ltd. and Norfolk Southern Corp.
In a letter obtained by The Wall Street Journal, UPS writes to
the U.S. Surface Transportation Board that a hostile takeover or
acquisition wouldn't be in the best interest of the intermodal
shipping community, which transports containers and trailers by
both rail and truck.
"UPS is concerned that this combination would lead to diminished
rail intermodal service levels and increased costs for all segments
of rail customers," the letter says. UPS is also concerned about
further rail consolidation that a merger would trigger.
But it may be moot. Canadian Pacific this week said it would not
launch a proxy battle to gain control of Norfolk Southern, but will
ask Norfolk's shareholders, though a nonbinding proxy resolution,
to support talks between the two companies. The strategic shift
came as Canadian Pacific's Chief Executive Hunter Harrison
acknowledged Wednesday that the railroad's options for winning a
hostile bid are " becoming shorter and shorter."
Canadian Pacific said that the deal would enhance competition.
Norfolk Southern and UPS declined to comment.
Write to Laura Stevens at laura.stevens@wsj.com
(END) Dow Jones Newswires
February 11, 2016 13:40 ET (18:40 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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