CP withdraws NS merger bid; SMART TD reacts
In a press release dated April 11, 2016, Canadian Pacific Railway (CP) announced that it has terminated its efforts to merge with Norfolk Southern (NS). CP has also withdrawn its resolution asking NS shareholders to vote in favor of good-faith negotiations between the two companies. “No further financial offers or overtures to meet with the NS board of directors are planned at this time,” CP said in their statement. CP CEO E. Hunter Harrison said, “…with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders.” SMART TD President Previsich came out against the merger in a letter addressed to the Surface Transportation Board (STB) in January of this year. “We strongly opposed the merger when it became clear that CP’s takeover of NS would cost U.S. jobs as well as have a negative impact on those who sought to ship by rail” said Previsich, who further commented: “Having long opposed the negative impact that mergers and acquisitions such as this have on our members, we are extremely pleased to hear that CP has officially terminated their quest to takeover NS.” SMART TD first reported CP’s interest in a merger with NS in November 2015. It soon became clear that NS was not interested when the railroad rejected all three of CP’s offers for unification. CP, however, continued to push for a takeover by trying to bypass the NS board of directors’ decision by going directly to the shareholders for a vote. “They don’t merge these big railroads to create job opportunities,” said SMART TD National Legislative Director John Risch. “CP’s plans were to essentially pillage NS’s infrastructure, claiming they could save $1.8 billion a year in costs. A CP/NS merger would not just be bad for rail workers, it would be terrible for America’s freight rail infrastructure.” Additionally, in a letter dated March 2, CP further sought to circumvent U.S. merger regulations by seeking declaratory action from the STB that would give them the power to essentially take over NS without a review from the STB or a yes-vote to merge from NS. This blatant scheme to evade U.S. regulatory requirements and assert control over NS before receiving regulatory approval did not sit well with SMART TD who joined with five other unions to write a response letter to the STB asking them to reject CP’s request. “…The Board should not entertain a request from this, or any carrier, for an advisory opinion on a hypothetical transaction. CP’s Petition is both inappropriate and untimely; it should be dismissed,” said SMART’s Associate General Counsel Erika Diehl-Gibbons and Attorneys Michael Wolly and Carla Siegel in their letter to the STB on behalf of SMART TD, BLET, IBEW, ATDA, NCFO and TCU/IAM. “The work and solidarity of SMART, BLET, TTD, AFL-CIO and all of our union brothers and sisters to raise this issue onto a public platform and to have our voices heard from the halls of Congress to the offices of the STB and FRA, had a direct impact on breaking CP’s attempt to continue its takeover bid–that if left to proceed, would have undoubtedly caused a major job loss, service disruption and a destructive domino effect throughout the industry. We look forward to our continued work and solidarity in supporting laws and provisions that protect our members –and all workers, from get-rich-quick schemes that are harmful to working men and women throughout our country,” said Previsich. The U.S. Department of Justice (DOJ) also filed its own request to the STB that CP’s request be denied. “Canadian Pacific’s voting trust proposal would compromise Norfolk Southern’s independence and effectively combine the two railroads prior to completion of the STB’s review,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “That makes no sense. We urge the STB to preserve its ability to review the impact of the proposal on competition and consumers before Canadian Pacific starts scrambling the eggs.” ______________________________________________________________________ The SMART Transportation Division is comprised of approximately 125,000 active and retired members of the former United Transportation Union, who work in a variety of crafts in the transportation industry.