Canadian Pacific Revises Terms Of Offer For Norfolk Southern - Quick Facts

(RTTNews) - Canadian Pacific Railway Ltd (CP, CP.TO) said that it has sent a revised offer letter to Norfolk Southern Corp. (NSC) that is financially more attractive and dramatically reduces the regulatory uncertainty for NS shareholders.

As per the revise offer, NSC shareholders will receive $32.86 in cash and 0.451 shares of stock in a new company which will own NSC and Canadian Pacific. Canadian Pacific's previous offer would have paid $46.72 cash and 0.348 shares in the combined railroad for each Norfolk share.

Canadian Pacific estimates the total value of the stock and cash consideration to NSC shareholders to be worth $125 to $140 per share at the closing of the transaction in May 2016.

The revised transaction offers a 37% to 53% premium to today's closing price of $91.52 and a 58% to 77% premium to the unaffected price of $79.14 per share.

Canadian Pacific said in the letter that it has improved its prior offer by: dramatically reducing the regulatory risk for NSC's shareholders, making it substantially more financially attractive by increasing NSC shareholders' ownership of the pro forma company from 41% to 47%, and agreeing to complete due diligence in no more than three weeks while contemporaneously negotiating definitive documentation.

Canadian Pacific said it is prepared to close the transaction into a voting trust to alleviate any regulatory concerns that NSC shareholders might have.

By utilizing a voting trust, NSC shareholders will receive a substantial cash payment and shares in a new investment grade company which would be listed on both the NYSE and TSX. Based on extensive work done by our lead transaction counsel, Simpson Thacher, and United States and Canadian regulatory counsel, Stinson Leonard Street and Bennett Jones, Canadian Pacific anticipates the closing and listing of shares to occur on May 1, 2016.