Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) is catching a bit of a tailwind off its 12-month lows, and investors are wondering if this is a good time to buy the stock.

Busy times

CP headquarters must be a very busy place this holiday season.

The company is trying to buy Norfolk Southern Corp. (NYSE:NSC) in a bid to set off a hotly debated consolidation process in the North American rail industry.

CP’s CEO Hunter Harrison has long advocated for mergers to help alleviate a massive rail bottleneck in Chicago.

His initial bid in November was for a 50-50 stock-and-cash bid that valued Norfolk Southern at about US$28 billion at the time of the offer and would have given Norfolk shareholders 41% ownership in the new company.

The first overtures were quickly rebuffed.

CP revised the offer to give Norfolk Southern’s shareholders a 47% stake in the combined company, arguing the pitch was more attractive because it would give them more upside potential.

The second proposal was quickly rejected and CP has come back with yet another offer.

The latest pitch adds a contingent-value right that gives Norfolk Southern investors as much as an extra US$25 per share.

A hostile takeover battle could be in the works if a deal can’t be cordially agreed upon by CP and Norfolk Southern’s board and management.

Some analysts are concerned the U.S. Surface Transportation Board won’t approve the deal. CP says the merger could get past regulatory hurdles because shippers would have access to competitive routes and other rail carriers. CP also says it would allow customers the choice of where to connect with a competing railroad along the routes.

CP believes the merger would create operating synergies of at least $1.8 billion.

Is this the time to buy CP?

The stock has fallen 22% in 2015 as investors worry about the slowing Canadian economy and the effects of the rout in the oil market.

CP appears determined to push ahead with a takeover of Norfolk Southern, and the battle could end up being long and drawn out. Harrison even said, “If this is going to be a street fight, so be it,” when speaking on a December 16 conference call.

The stock is a strong long-term pick and certainly more attractive at $174 per share today than it was in April at $240, but investors might want to take a wait-and-see approach at the moment as the fight for Norfolk Southern could prove be a distraction at a time when the industry is facing some strong headwinds. Calling a bottom at this point is risky.

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Fool contributor Andrew Walker has no position in any stocks mentioned.