UPS Opposes Rail Merger Between Norfolk Southern and Canadian Pacific

By Laura Stevens 

United Parcel Service Inc., one of the nation's largest rail customers, became the latest company to oppose a merger between Canadian Pacific Railway Ltd. and Norfolk Southern Corp.

In a letter obtained by The Wall Street Journal, UPS writes to the U.S. Surface Transportation Board that a hostile takeover or acquisition wouldn't be in the best interest of the intermodal shipping community, which transports containers and trailers by both rail and truck.

"UPS is concerned that this combination would lead to diminished rail intermodal service levels and increased costs for all segments of rail customers," the letter says. UPS is also concerned about further rail consolidation that a merger would trigger.

But it may be moot. Canadian Pacific this week said it would not launch a proxy battle to gain control of Norfolk Southern, but will ask Norfolk's shareholders, though a nonbinding proxy resolution, to support talks between the two companies. The strategic shift came as Canadian Pacific's Chief Executive Hunter Harrison acknowledged Wednesday that the railroad's options for winning a hostile bid are " becoming shorter and shorter."

Canadian Pacific said that the deal would enhance competition. Norfolk Southern declined to comment, and UPS didn't immediately respond to a request for comment.

Write to Laura Stevens at [e-mail]

(END) Dow Jones Newswires

February 11, 2016 12:46 ET (17:46 GMT)

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