Norfolk Southern rejected Canadian Pacific’s latest takeover offer less than an hour after it was announced yesterday, but the Canadian railroad now appears ready to take its case directly to the shareholders of its rival.

The new offer would exchange each Norfolk Southern share for $32.86 in cash and 0.451 share in the combined company.

That includes less cash than the initial offer of $46.72 per share, but more equity than last month’s offer of 0.348 share in the combined company.

The new bid also promises that Norfolk Southern shareholders could receive the cash next spring before federal regulators complete their review.

The two railroads don’t agree on how to value the shares in the new company.

“Canadian Pacific’s revised, reduced proposal is not only less than what the Norfolk Southern board has already found to be grossly inadequate, it is even more uncertain and risky given the decrease in the cash consideration,” Norfolk Southern Chairman, CEO and President Jim Squires said.

But Canadian Pacific executives and board member Bill Ackman, who leads activist investment firm Pershing Square, said yesterday they see little downside in trying to combine the two railroads.

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They have predicted roughly $1.8 billion in annual cost savings if the railroads are merged, and while the deal is being reviewed Canadian Pacific CEO Hunter Harrison would likely become Norfolk Southern CEO and start making operational changes.

“Most of the synergies come from improving the Norfolk Southern railroad, and those happen regardless of whether the merger is ultimately approved,” Ackman said.

Shares of Norfolk Southern, based in Norfolk, Virginia, closed down $5.21, or 5.69 percent, to $86.31 yesterday. Canadian Pacific Railway Ltd.’s stock also declined, falling to $126.13, down $4.35, or 3.3 percent.

Federal regulators haven’t approved any major railroad mergers in more than 15 years. One of the only major deals in recent years is when Warren Buffett’s Berkshire Hathaway conglomerate bought BNSF railroad in 2010.

Norfolk Southern officials said they doubt whether the Surface Transportation Board would approve this merger.