Dear Jim,

Get 2 weeks of Activist Ideas free

In order to address the concerns you have publicly expressed, we have improved our prior offer by: 1) dramatically reducing the regulatory risk for NSC’s shareholders, 2) making it substantially more financially attractive by increasing NSC shareholders’ ownership of the pro forma company from 41% to 47%, and 3) agreeing to complete due diligence in no more than three weeks while contemporaneously negotiating definitive documentation.

To alleviate any regulatory concerns that NSC shareholders might have, we are prepared to close the transaction into a voting trust. By utilizing a voting trust, NSC shareholders will receive a substantial cash payment and shares in a new investment grade company which would be listed on both the NYSE and TSX. Based on extensive work done by our lead transaction counsel, Simpson Thacher, and our United States and Canadian regulatory counsel, Stinson Leonard Street and Bennett Jones, we anticipate the closing and listing of shares to occur on May 1, 2016.

At the closing of the transaction, NSC shareholders will receive $32.86 in cash and 0.451 shares of stock in a new company which will own NSC and Canadian Pacific. We estimate the total value of the stock and cash consideration to NSC shareholders to be worth $125 to $140 per share at the closing of the transaction in May 2016. The revised transaction offers a 37% to 53% premium to today’s closing price of $91.52 and a 58% to 77% premium to the unaffected price of $79.14 per share.

We remain ready to work with you and your team immediately on this transformational opportunity.

This offer has received the unanimous support of our Board of Directors.