Calling the proposed buy-out “grossly inadequate” and “low premium,” the 13 members of the board of directors of the Norfolk Southern Corp. have unanimously rejected a $28.4 billion offer from the Canadian Pacific Railway to acquire its rail operations.

In a lengthy letter in response to the offer, the Norfolk Southern (NS) further stated that even if the deal eventually materialized after the lengthy review process, it would do so subject to multiple regulatory restrictions.

“There is a high probability that, after years of disruption and expense, the proposed combination would be rejected by the Surface Transportation Board,” said Norfolk Southern Chairman, President and CEO James A. Squires. “We also believe the STB would reject Canadian Pacific’s proposed voting trust structure, and that there is no certainty that any other voting trust structure would be approved.”

Even if the acquisition was ultimately given the go-ahead, he said, “It would be subject to a wide range of onerous conditions that would reduce the value of the stock consideration that has been proposed.”

The Surface Transportation Board employs a “public interest test” when considering proposed mergers, so any deal would not only have to address federal antitrust concerns, but also result in “improved service, economic efficiencies and public safety” for those utilizing the combined rail service.

The STB standard, according analysts, is the primary reason why there have been relatively few mergers or acquisitions in the U.S. railroad industry over the past decade.

In a statement announcing its offer to the Virginia-based rail carrier, Canadian Pacific had argued that the combined railroad would offer excellent customer service and competitive rates for shippers, and that it would satisfy the U.S. Surface Transportation Board and Canadian regulators.

The Norfolk Southern board, said Squires, “believes that Canadian Pacific’s short-term, cut-to-the-bone strategy could cause Norfolk Southern to lose substantial revenues from our service-sensitive customer base. We also believe the proposed transaction risks harm to vital transportation infrastructure and the communities we serve.”

Any strategy,” he said, “that hurts our customers and the broader community is highly unlikely to receive regulatory approval and is inconsistent with the delivery of shareholder value over the long-term.”

The offer by the Calgary, Alberta-headquartered railroad isn’t its first attempt to acquire a U.S. rail carrier. Last year the company made an unsuccessful bid to buy the CSX Corp.

The Norfolk Southern Corp.’s Norfolk Southern Railway subsidiary operates and maintains approximately 20,000 miles of track in 22 states and the District of Columbia, providing service to every major container port in the eastern U.S.