Calgary Alberta - After months of wrangling, Canadian Pacific Railway Ltd. (CP) has reluctantly agreed to ask U.S. regulators to weigh in on the first step of its planned takeover of Norfolk Southern Corporation (NS).
 
CP's takeover offer, which NS has repeatedly rejected, proposes putting the Canadian railroad into a voting trust so that its veteran CEO can take the helm of NS before the merger even closes.
 
This would theoretically allow the companies to merge financially while keeping their management separate until regulators rule on the proposed merger.
 
NS has asked CP to seek a declaratory order from the U.S. Surface Transportation Board (STB) as to whether such a structure is likely to receive regulatory approval, a request CP ignored until Tuesday.
 
"While we remain fully confident in our comprehensive regulatory plan, shareholders of both CP and NS have recommended 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," CP chief executive Hunter Harrison said in a statement.
 
"We still think this action is unnecessary, however, we believe listening to the shareholders, the owners of our respective companies, is important."
 
NS issued a brief response to the decision, saying CP has "acknowledged that there is a path to determine the validity of its proposed voting trust structure by seeking a declaratory order from the STB."
 
RBC analyst Walter Spracklin said there's a "good chance" the STB will refuse the request for an initial review and insist that CP go through the normal regulatory channels instead.
 
Kristine Owram.