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CP CEO slams FedEx over opposition to Norfolk deal

Hunter Harrison wants major railroad shippers to mind their own businesses.

The CEO of Canadian Pacific Railway (CP.TO) told BNN on Tuesday that FedEx Corp. had no place objecting to his strategy direction. Calgary-based CP has been pursuing a controversial $28.4-billion plan to merge with Virginia-based Norfolk Southern (NSC.N) for nearly four months and last week, the Memphis-based delivery giant joined rival United Parcel Service in opposing the deal.

“My friends at Federal Express that I grew up with in Memphis, I don’t know where they gained all this knowledge on railroads,” said Harrison. “I was a little disappointed. I don’t mind people objecting to transactions but let’s discuss it first. There was no discussion and I would imagine someone asked them to object.”

In a submission to the Surface Transportation Board in the United States dated February 25th, FedEx raised what it described as “significant concerns” about the proposed merger, specifically the possibility of higher shipping costs and fewer services. FedEx warned “such an erosion of competition would ultimately adversely impact the American consumer and our still somewhat fragile economy.”

Norfolk has aggressively resisted CP’s attempt to overcome strict regulatory limits on railroad mergers in order to create what would become North America’s largest rail carrier with more than 53,000km of track. Aside from a two-hour meeting between Harrison and Norfolk CEO Jim Squires, the American company has consistently refused to meet with their would-be Canadian suitor, according to CP’s CEO.

Last month, CP said it will ask Norfolk shareholders to request that management come to the table by having them vote on whether to pursue talks at Norfolk’s upcoming annual meeting, though Harrison stressed that vote is simply about encouraging talks not CP’s specific proposal. The exact date for the Norfolk AGM has not been announced, but it is usually held in May.

“If we don’t win the vote and there is no confidence shown we will move forward with CP,” Harrison said. “Now, if someone picks up the phone in the next day and says ‘Hey, let’s reconsider this,’ then we will listen.”

In the meantime, Harrison is continuing to hold out hope the merger will eventually move forward.

“I think there is a strong possibility,” Harrison said when asked if the deal will get done within a year. “I pray every night that that might happen.” CTV Two CTV News CTV News Channel BNN - Business News Network CP24