In what could be the merger of two of the world’s largest railroad operators, a media report has suggested that the Canadian Pacific Railway Ltd has approached America’s CSX Corp with a merger proposal to bring the two big North American railroad operators together.
Citing people known to the matter, the Wall Street Journal (WSJ) on Sunday said that the proposal was made last week, which was later rebuffed.
The newspaper said that it was clueless on whether Canadian Pacific has shelved the plan.
Meanwhile, CSX spokesperson Melanie Cost and Canadian Pacific spokesman Martin Cej declined to comment on behalf of their companies over the matter.
Canadian Pacific, which holds the number two position in Canada’s railway by revenue, has a market value of about USD 32 billion.
On the other hand, Florida-based CSX is third top most US carrier with worth about USD 30 billion. The company’s revenue is higher, the Journal said.
The newspaper, in its report, said that getting consent from the US Surface Transportation Board is expected to be the potential hurdle to the deal.
The transportation board, which oversees railroads, mainly intervenes between sensitive deals in the industry.
The agency had earlier in 2000 disapproved a merger proposal between Burlington Northern and Canadian National Railway, which is the largest rival of Canadian Pacific Railway’s larger rival.
Another potential obstacle that may come up is the National security officials.
Meanwhile, the market watchers said that the M&A activities were found to be rampant this year and the railway industry getting rarely hit by hostile takeovers.
The Canadian Pacific shares dropped 5 percent to close at USD 189.37 on Friday. On the other side, CSX shares also declined 2.6 percent to close at USD 29.94.
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