Filed by Canadian Pacific Railway Limited
Pursuant to Rule 425
under the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: Norfolk Southern Corporation (Commission File No. 001-8339)
No Offer or Solicitation
This communication is neither an offer to purchase or exchange nor a solicitation of an offer to sell securities. This communication relates to a proposed business combination between Canadian Pacific Railway Limited (“CP”) and Norfolk Southern Corporation (“NS”).
Important Information For Investors And Shareholders
Subject to future developments, additional documents, including one or more proxy statements in connection with the solicitation of proxies for the 2016 annual meeting of NS shareholders, regarding the proposed transaction may be filed with the Securities and Exchange Commission (the “SEC”). On March 29, 2016, CP filed its definitive proxy statement (the “CP Definitive Proxy”) with the SEC. Investors and security holders are urged to read such disclosure documents regarding the proposed transaction, including the CP Definitive Proxy, if and when they become available, because they will contain important information. Investors and security holders may obtain a free copy of the disclosure documents (when they are available) and other documents filed by CP with the SEC at the SEC’s website at www.sec.gov. The disclosure documents and these other documents may also be obtained for free from CP at http://www.cpr.ca/en/investors or by directing a request to Canadian Pacific Railway Limited, 7550 Ogden Dale Road S.E., Calgary, Alberta, Canada, T2C 4X9, Attention: Office of the Corporate Secretary.
Participants in Solicitation
CP and its directors, executive officers and other employees may be deemed to be participants in any solicitation of CP or NS shareholders in connection with the proposed transaction. Information about CP’s executive officers and directors is available in CP’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 29, 2016. Additional information about the interests of potential participants is included in the CP Definitive Proxy.
Forward Looking Statement
This communication contains certain forward-looking information within the meaning of applicable securities laws relating, but not limited, to CP’s proposal to NS regarding a possible business combination, the anticipated results and benefits of the proposed transaction and matters relating to regulatory approvals and changes. This forward-looking information also includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words or headings such as “financial expectations”, “key assumptions”, “anticipate”, “believe”, “expect”, “plan”, “will”, “outlook”, “should” or similar words suggesting future outcomes.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CP’s forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information, including but not limited to the following factors: the ability of the parties to agree to the terms of a proposed transaction; the ability of the parties to obtain the required regulatory approvals; the ability to recognize the financial and operational benefits of the transaction;
changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CP; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. The foregoing list of factors is not exhaustive.
These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Corporation’s Annual Report on Form 10-K filed with the SEC on February 29, 2016. Readers are cautioned not to place undue reliance on forward-looking information. Forward-looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.
Letter to Shareholders of Norfolk Southern Corporation Re: Proxy Statement of Canadian Pacific Railway Limited An Opportunity to Create Significant Value for Norfolk Southern Shareholders Send a clear message to the Norfolk Southern Board of Directors that Norfolk Southern shareholders support a path to superior value creation USE YOUR GREEN PROXY TO VOTE FOR CP’S PROPOSED SHAREHOLDER RESOLUTION TODAY
AN OPPORTUNITY TO CREATE SIGNIFICANT VALUE FOR NORFOLK SOUTHERN SHAREHOLDERS FOR MORE INFORMATION VISIT CPCONSOLIDATION.COM WHY ARE YOU RECEIVING same. Multiple analysts agree that NS’ plan is less THIS REQUEST? ambitious than it could be: We are writing to you today to underscore that “[NS’] plan targets cost improvements of $650mm, your vote at the May 12, 2016 Norfolk Southern (NS) annual meeting of shareholders will have half of the CP target of over $1.2bn by 2020. If a major impact on the future value of your we truly believe in holding management teams investment in NS. We are urging all shareholders accountable, then we must ask the question: why to vote the GREEN proxy card in favor of the is $650mm in savings superior for shareholders Canadian Paci?c (CP) shareholder resolution (the compared to $1.2bn?” Proposed Resolution) in order to bring the NS—Brandon Oglenski, Barclay’s Board of Directors to the table with CP to discuss a merger. We are con?dent that the combination “NSC’s stated margin improvement is only ~50 percent of CP and NS would unlock signi?cant of what CP management is promising over a very shareholder value. similar if not shorter time frame.”—Turan Quettawala, Scotia Capital Inc. WHAT IS THE PURPOSE OF THE “With a consistent history of missing earnings and SHAREHOLDER RESOLUTION? margin targets during periods of coal challenges, The Proposed Resolution is simply asking NS to sit we think this is a critical oversight in the Norfolk down with CP for good faith discussions on value plan, which investors should rightfully question.” creation, something the NS Board of Directors has—Brandon Oglenski, Barclay’s repeatedly refused to do, despite our multiple offers for dialogue. In doing so, they are ignoring “NSC’s plan continues to lag the peer group as your interests as shareholders. For us, the case opposed to getting ahead of the revenue challenges for change to maximize shareholder value at with cost savings.” NS could not be clearer.—Jeffrey Kauffman, Buckingham Research Group By contrast, CP’s management team has transformed THE SHAREHOLDER RESOLUTION IS A CP from industry laggard to leader between 2012 CLEAR OPPORTUNITY TO CREATE VALUE and 2015. Today, CP’s adjusted operating ratio has improved by more than 1,600 basis points to NS’ track record is one of consistent and profound 61 percent in 2015, and we expect it to fall below underperformance. Over the last several years, 59 percent in 2016. Over that same time frame, NS’ NS has been one of the worst performing Class I operating ratio has stagnated at 71.7 percent. railroads in North America across all key ?nancial and operating metrics – efficiency (operating ratio), We believe NS can do better, but at best their earnings growth, total shareholder return and top plan calls for management to achieve an operating line revenue growth. In 2015, NS launched a plan ratio of below 65 percent by 2020. Asking NS to address the company’s abysmal performance. leadership to speak with CP is the ?rst step But, as their fourth quarter ?nancial results towards real change. revealed, they’re simply offering more of the ACT TODAY – VOTE USING YOUR GREEN PROXY
AN OPPORTUNITY TO CREATE SIGNIFICANT VALUE FOR NORFOLK SOUTHERN SHAREHOLDERS FOR MORE INFORMATION VISIT CPCONSOLIDATION.COM CP CEO HUNTER HARRISON HAS AN UNMATCHED TRACK RECORD OF CREATING VALUE FOR SHAREHOLDERS In his first two years as CP’s CEO, Hunter Harrison helped increase CP’s share price by 147 percent to USD$181.14 per share through the end of June 2014. Over his tenure, the market capitalization of CP has grown by over CAD$14 billion on the Toronto Stock Exchange. We are con?dent that Mr. Harrison can bring similar operational improvements to NS and deliver signi?cant upside to the NS share price. THE BENEFITS OF A COMBINATION OF CP AND NS ARE COMPELLING CP strongly believes that a combined railroad would offer unparalleled customer service and competitive rates that will support the success of the shippers and industries it serves, and satisfy the U.S. Surface Transportation Board (STB) and other regulators. CP further believes that the proposed combination of CP and NS offers the best opportunity to improve the ef?ciency of the existing network and create much needed incremental capacity without adding infrastructure, all while improving service for shippers. 2015 ADJUSTED OPERATING RATIOS LESS IS MORE: NS PERFORMANCE LAGS THE INDUSTRY ACT TODAY – VOTE USING YOUR GREEN PROXY A COMBINED CP-NS WILL CREATE + SIGNIFICANT VALUE TO SHAREHOLDERS + UNSURPASSED SERVICE TO SHIPPERS + IMPROVED SAFETY FOR COMMUNITIES + INCREASED COMPETITION AMONG RAILWAYS CP’S PREVIOUS OFFERS FOR NS WOULD DELIVER A SIGNIFICANT PREMIUM TO NS SHAREHOLDERS Based on our estimates for the intrinsic value of a combined CP-NS, our most recent offer for NS would deliver a 61 percent to 78 percent premium to the unaffected NS share price of USD$79.14 per share. If the NS Board of Directors is willing to engage in discussions with CP regarding a combination, we are prepared to discuss all issues, including price, openly and constructively. 61% to 78% premium to the unaffected NS share price WOULD A MERGER SATISFY REGULATORY REQUIREMENTS? CP has carefully reviewed the STB merger rules and standards, including those of the voting trust structure, and has a thoughtful and comprehensive plan to address the regulatory process. We believe that all stakeholders will bene?t if the proposed transaction is evaluated on its merits and based on a full record that includes the opportunity for all interested parties to comment within the STB’s prescribed framework, free from political interference. On March 2, CP petitioned the STB for a declaratory order con?rming the viability of the voting trust structure CP has suggested as part of the proposed merger.
AN OPPORTUNITY TO CREATE SIGNIFICANT VALUE FOR NORFOLK SOUTHERN SHAREHOLDERS FOR MORE INFORMATION VISIT CPCONSOLIDATION.COM A VOTE “FOR” THE RESOLUTION IS A DOES THIS MEAN I WOULD BE VOTE “FOR” AN OPPORTUNITY FOR VOTING FOR A MERGER? SIGNIFICANT VALUE CREATION No. A vote for the Proposed Resolution is A vote for the Proposed Resolution will send a merely a request that NS commence discussions clear message to the NS Board of Directors that regarding a potential value-creating combination NS shareholders support NS exploring all avenues with CP. Approval of the Proposed Resolution for maximizing shareholder value, including will not constitute shareholder approval of a through a business combination with CP. possible business combination transaction. Nor The following is the verbatim text of the will approval require the NS Board of Directors to shareholder resolution that has been presented take any speci? c action. However, it will tell the to NS, to be voted on at the 2016 annual NS Board of Directors that NS shareholders want meeting of NS shareholders. NS to engage in a meaningful dialogue with CP regarding a possible business combination. RESOLVED, that the shareholders of the Company WHO SHOULD I CONTACT IF hereby request that the board of directors of the I HAVE QUESTIONS? Company promptly engage in good faith discussions with Canadian Paci? c Railway Limited (“Canadian If you have any questions or require any Paci? c”) regarding a business combination transaction assistance, please contact: involving Canadian Paci? c and the Company, without D.F. King & Co., Inc. (“D.F. King”), proxy solicitor in any way precluding discussions the board of for CP, toll free at 1 (800) 252-8173. directors of the Company may choose to engage in Bank brokers and callers from other with other parties. countries may call collect at (212) 269-5550. Or E-mail: NS-CP@dfking.com. WE URGE YOU TO SEND THIS IMPORTANT MESSAGE TO THE NS BOARD OF DIRECTORS BY COMPLETING, SIGNING, DATING AND RETURNING THE GREEN PROXY CARD TO D.F. KING TODAY (OR BY SUBMITTING YOUR PROXY BY INTERNET OR PHONE). PLEASE RETURN YOUR GREEN PROXY CARD VOTING “FOR” THE PROPOSED RESOLUTION TODAY. cpconsolidation.com