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The ES40DC diesel train locomotive at Norfolk Southern train yards in Roanoke, Virginia is shown Saturday, December 17, 2005.

Sam Dean/Bloomberg

Norfolk Southern Corp.'s CEO is urging its employees not to support a motion urging the railway's board of directors to enter into merger talks with Canadian Pacific Railway Ltd.

In a letter sent ahead of the railway's May 12 annual meeting, chief executive Jim Squires said employees who are shareholders should vote against the motion, a move unanimously recommended by the company's board.

"Every vote is important," he wrote in the missive released Tuesday in a regulatory filing.

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Squires said the Virginia-based railway has worked over the past months on a strategic plan to streamline operations, drive profitability and accelerate growth.

"We are improving our operations and positioning Norfolk Southern to be a fast, lower-cost, and more profitable railroad."

Squires also urged employees not to let CP's resolution become a distraction.

Norfolk Southern has refused to enter into negotiations on CP's $30-billion (U.S.) offer, calling it "grossly inadequate" and likely to face substantial regulatory risks.

However, after months of rejecting the Calgary-based railway's overtures, Norfolk said in a proxy circular released late Monday that it was willing to enter talks if CP was prepared to "meaningfully increase" its bid and the U.S. railway regulator sanctions its proposed voting trust structure.

CP Rail chief executive Hunter Harrison said that the railway is pleased that Norfolk may now be willing to enter into direct face-to-face negotiations.

"CP has consistently stated that we are open to discussing all terms of a potential deal, including price, but we can't negotiate with ourselves," he said in a news release.

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Harrison said last month that CP was prepared to walk away from a takeover bid if Norfolk Southern shareholders didn't vote for negotiations. CP said Tuesday that it remains open to working with Norfolk Southern to successfully structure a transaction.

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