The Deal's Lou Whiteman reports that Norfolk, Va.-based Norfolk Southern Corp. (NSC) formally rejected a $28.4 billion offer on Friday from Calgary, Alberta's Canadian Pacific Railway Ltd. (CP) calling the proposal risky and saying a merger is unlikely to gain clearance from regulators. The company also called the offer grossly inadequate. Shares of Norfolk opened down about 4.7% or more than $4 on Friday after the rejection was announced. Canadian Pacific put Norfolk in play in November, going public with an offer to create a transcontinental railroad. The offer came almost one year after the company made an unsuccessful run at CSX Corp. (CSX). Canadian Pacific CEO Hunter Harrison in interviews discussing the proposal has suggested he could eliminate Norfolk regulatory risk by putting the target into a trust while the Surface Transportation Board reviews the merger, giving Norfolk shareholders a quicker payout. Norfolk chairman and CEO James Squires in a letter addressed the trust idea, noting that such a maneuver would still be subject to a public comment period and a regulatory approval process. While similar trusts have been used in railroad mergers in the past, Norfolk notes that none have been approved since new rules were put in place by the STB in 2001.