Norfolk Southern Corporation (NS) announced today that its board of directors unanimously rejected Canadian Pacific’s (CP) December 16, publicly disclosed, revised proposal. The offer included $32.86 in cash, a fixed exchange ratio of 0.451 shares in a new company that would own Canadian Pacific and Norfolk Southern, and 0.451 of a Contingent Value Right (CVR).

In a letter sent December 23, NS told CP’s chief executive officer E. Hunter Harrison and chairman of the board Andrew F. Reardon that after careful review, the board unanimously determined the latest revised proposal was “grossly inadequate, creates substantial regulatory risks and uncertainties that are highly unlikely to be overcome, and is not in the best interest of the company and its shareholders.”

NS added that this would be the case even if the CVR had a value at the high end of the range suggested in your publicly filed presentation.

“In fact, our financial advisors believe that the CVR would trade at a significant discount,” the company noted.

NS told CP that it had not addressed the previously identified regulatory issues, adding that it believes CP’s voting trust structure would not be approved.

“You continue to publicly declare that we are not ‘engaging’ or ‘meeting’ with you,” NS said in the letter. “There is no basis to meet until you both make a compelling offer and address the regulatory issues, which you have the ability to do by seeking a declaratory order. We also note your repeated public statements that you are not willing to increase your offer regardless of whether we were to meet.”