Canadian Pacific says it wants to buy Norfolk Southern to create a much larger transcontinental railroad.
The company did not disclose the price Tuesday but said the offer includes a “sizable premium in cash and stock” to Norfolk shareholders.
Canadian Pacific operates in Canada and the United States. It would significantly expand its reach by buying the Norfolk, Virginia-based company, which operates 20,000 route miles in 22 states and the District of Columbia.
Norfolk Southern Corp. late Tuesday acknowledged it received the “unsolicited, low-premium, non-binding and highly conditional indication of interest” and will evaluate it. The company said the per-share offer worth $46.72 in cash and 0.348 of a Canadian Pacific share represents a premium of less than 10 per cent based on its closing price Tuesday.
Canadian Pacific says the combined company would have the potential for faster profit growth than either could achieve alone.
Shares of Norfolk Southern rose 3.5 per cent in extended trading following the announcement. Canadian Pacific Railway Ltd. shares were unchanged.