10/14/2014 11:29 EDT | Updated 12/14/2014 05:59 EST

Canadian Pacific-CSX Merger Report Has Analysts Doubtful

CALGARY - Analysts say they'd be glad to see Canadian Pacific Railway Ltd. (TSX:CP) join forces with U.S. rival CSX Corp., but they're skeptical a deal can be done.

A Wall Street Journal article over the weekend, citing anonymous sources, said CP had made an overture to CSX last week, but was rebuffed.

Desjardins analyst Benoit Poirier says a merger would be positive, but regulatory hurdles and the reluctance of CSX's management makes a deal unlikely.

David Tyerman, with Canaccord Genuity, agrees "significant value" could be generated if the two railways merged, but he says such an event is "quite speculative" right now.

Canadian Pacific shares were down about 1.8 per cent at $208.33 on the Toronto Stock Exchange around late morning Tuesday. Canadian markets were closed on Monday for Thanksgiving.

In New York, CSX shares gained nearly six per cent on Monday and by late morning Tuesday, had added another 2.8 per cent to trade at US$32.59.

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