Calgary Alberta - Canadian Pacific (CP) reportedly approached the CSX railroad about a possible merger earlier this year while it continued to pursue its proposed takeover of rival Norfolk Southern (NS).
 
The latest overture to Jacksonville, Florida-based CSX was first reported by The Wall Street Journal.
 
CP first contacted CSX in the fall of 2014 about a potential deal and was rejected.
 
CP CEO Hunter Harrison said his railroad remains committed to its roughly $30 billion bid for NS, which is based in Norfolk, Virginia.
 
"We've said all along that if we looked at the synergies between the two eastern carriers, right now both of them would work for us," Harrison said to the Wall Street Journal.
 
CP spokesman Martin Cej said that quote is accurate.
 
Officials with CSX and NS railroads both declined to comment.
 
The reported contact with CSX reinforces how interested CP officials are in joining with one of the eastern railroads, but it doesn't necessarily make a deal likely to succeed, said Citi analyst Christian Wetherbee.
 
A deal faces significant regulatory hurdles because no major railroad mergers have been approved since the federal Surface Transportation Board (STB) adopted tough rules for them in 2001.
 
CP first approached NS last fall about the possibility of combining the two railroads.
 
The offer has been revised and rejected several times.
 
NS has said it believes CP's offer is grossly inadequate, and it questions whether federal regulators would approve such a merger or impose costly conditions on the deal.
 
CP officials have said they plan to ask the board to review the proposed structure of the NS deal, which calls for setting up a voting trust to oversee both railroads and installing Harrison as CEO of NS while regulators review the deal.
 
NS believes that would violate a prohibition against an acquiring railroad taking control of its target before a deal is approved.
 
CP also plans to ask NS shareholders at their annual meeting to vote on whether they want the two railroads to discuss a possible merger.
 
But the non-binding vote won't include details of a specific proposal.
 
CP officials have said they believe combining the two railroads would create a more efficient operation.
 
CP has also said it could cut roughly $1.8 billion in annual costs from the combined railroad.
 
NS has said those cuts would likely jeopardize the customer service and performance that customers expect.
 
It is pursuing its own plan to cut US$130 million in costs this year and create more than US$650 million in annual cost savings by 2020 while improving service.
 
Josh Funk.