Street Insider: Canadian Pacific Railway (CP) Petitions U.S. Surface Transportation Board for Declaratory Order to Confirming

Canadian Pacific (NYSE: CP) today announced that it has petitioned the U.S. Surface Transportation Board (STB) for a declaratory order confirming the viability of the voting trust structure CP has suggested as part of its proposed merger with Norfolk Southern Corp. (NYSE: NSC).
“Shareholders of both CP and NS have asked that we seek this declaratory order as a means to better understand the STB’s views on the proposed voting trust model ahead of any formal application and we have listened to the owners of our respective companies,” said E. Hunter Harrison, CP’s Chief Executive Officer.
“Since we remain convinced that productive discussions about the potential structure and value of a formal bid must take place face to face we hope this show of good faith is met with an equal demonstration on the part of NS,” said Harrison.
Earlier this month, CP submitted a resolution to NS shareholders to compel their board of directors to meet with CP to discuss a transaction. CP is confident that such a combination would create a true end-to-end transcontinental railroad that would enhance competition, benefit the public and drive economic growth. NS shareholders can vote on this resolution at the upcoming NS annual meeting.
While the declaratory order presents a hypothetical proposed trust – outside the established STB procedure for seeking formal trust approval – CP is hopeful that the STB will be able to offer clarity that will allow shareholders to make an informed decision on CP’s pending resolution.
Voting trusts have been used in hundreds of transactions involving regulated industries, including 144 transactions overseen by the STB since deregulation of the rail industry in 1980. Trusts, besides protecting against unlawful control violations, are a key means of reducing the risk that the regulatory approval process will either interfere with the marketplace’s assessment of a merger or be used as a tool by management to fend off would be acquirers.