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Canadian Pacific Goes Public With Norfolk Southern Offer

Canadian Pacific Railway Ltd. went public with its pursuit of Norfolk Southern Corp., wooing the U.S. company’s shareholders to get behind a deal that would create a transcontinental railroad.

The gambit renews Chief Executive Officer Hunter Harrison’s effort to link Canada’s second-largest carrier with one of the big operators in the eastern U.S. Talks faltered with CSX Corp. in late 2014 but didn’t end Harrison’s quest to write a final chapter in consolidating the North American industry.

“This has been discussed for months, and the CEO wasn’t hiding the fact he was looking to consolidation plays,” said Victor Kuntzevitsky, a senior associate at Northland Wealth Management in Toronto, which manages about C$325 million. “I don’t see CP letting this get away from them. This is an important acquisition for them.”

While Canadian Pacific promised “a sizable premium,” Norfolk Southern called the bid an “unsolicited, low-premium, non-binding and highly conditional indication of interest” that was less than 10 percent higher than Tuesday’s close. The board will evaluate the proposal, according to Norfolk Southern, whose market value was about $26 billion.

The directors are unlikely to agree to a takeover by Canadian Pacific, and even if they did, Norfolk Southern sees little chance that regulators would approve because shippers, unions and other railroads would balk, said two people familiar with the matter who asked not to be identified because the details aren’t public.

Norfolk Southern jumped in extended trading, signaling that investors may be open to an overture from Canadian Pacific, whose largest shareholder is activist investor Bill Ackman. The U.S...