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Canadian Pacific provides details of revised offer for Norfolk Southern


CALGARY, Alta.– Canadian Pacific has presented a revised, enhanced offer for Norfolk Southern Corp.that will give NS Shareholders the opportunity to receive for each share of NS US$32.86 in cash, 0.451 shares of stock in the combined CP-NS company, and 0.451 of a contingent value right, which will have a maximum value of US$25.

CP said it is committed to this transaction, which would create what it said would be “a true coast-to-coast railway that enhances competition and generates significant shareholder value.”

To that end, CP has added contingent value rights (CVR) to the offer, which increase the overall value of the offer and also protect the value to NS shareholders going forward.

A CVR is a highly liquid instrument that gives holders the ability to convert to cash at their discretion. This particular CVR protects the holder’s value in the event that the value of the stock in a combined CP-NS is below US$175 a share at the date of payment. Each CVR would entitle the holder to receive a cash payment from CP equal to the difference between the CP-NS share price during the relevant measurement period and US$175 per share (with no payment in the event CP-NS share price is above US$175), up to a maximum value of US$25 a share.

Under the CP proposal, the measurement period would begin on or about April 20, 2017 and would end on or about October 20, 2017 with shareholders receiving their cash payment on or about October 25, 2017. In the event of a full CVR payout, the total cash payment would represent an additional US$3.4 billion and CP is confident it would maintain an investment grade rating, the company said in a release.