Canadian Pacific Alleges Competitors Trying to Block Union Pacific Deal

Canadian Pacific Railway Ltd. on Tuesday stepped up efforts to win support for its hostile bid to merge with Norfolk Southern Corp., filing a complaint with the U.S. Department of Justice alleging some of its competitors were acting together to thwart the deal.

In a letter to Justice officials, the Calgary, Alberta-based railroad operator said recent public criticisms of its proposal by senior officials from CSX Corp. and Union Pacific Corp. marked "a concerted effort to block" the planned deal to protect their business, in violation of antitrust laws.

"The fact that these major railroads have joined to work so feverishly against CP's proposal speaks volumes about their concerns regarding the impact the transaction would have on their competitive positions," the letter said.

A spokesman for Union Pacific disputed the allegation. "We have communicated with other railroads for the purpose of petitioning the government. We oppose this merger, and we are prepared to discuss our views with the government," he said.

Spokespeople for Norfolk Southern and CSX declined to comment.

Since Canadian Pacific announced its cash-and-stock merger proposal for Norfolk Southern last November, its merger ambitions have been challenged by rapidly shrinking freight levels due in part to the commodity slump. The stocks of North America's seven Class 1 railways have swooned in the face of sharp declines in freight traffic. Canadian Pacific has weathered the worst drop, with its stock price down about 17% since the beginning of the year. Norfolk Southern's shares have fallen 15% in that time.

At midday Tuesday, CP was trading on the New York Stock Exchange at $106.45, up 2%. Norfolk Southern was trading at $71.90, up 0.2%.

CP, backed by one of its major shareholders, activist William Ackman, has said a merger with Norfolk Southern would create a more efficient rail network and reduce expensive traffic bottlenecks, particularly in the Chicago area.

Competitors, meanwhile, have complained the merger would limit competition and trigger price increases.

Write to Jacquie McNish at Jacquie.McNish@wsj.com and Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

January 19, 2016 13:45 ET (18:45 GMT)

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