The Canadian Pacific Railway on Saturday welcomed a favorable regulatory decision related to its proposed merger with Kansas City Southern, the same day that Kansas City said its board determined that a “better proposal” from a competing proposal from the Canadian National Railway “Can be expected”.
Kansas City Southern said the board made its decision unanimously and said it would negotiate with Canadian National, although it is “bound by the terms of the CP merger agreement”. It noted that its board “does not determine” that the CN proposal “actually constitutes a company superior proposal.”
Canadian Pacific’s $ 25 billion cash-and-stock offerings, Kansas City Southern, had a value of $ 275 per share at the time of the deal’s announcement in March. A cash-and-stock offering from Canadian National’s rival, earlier this week, holds $ 325 per share in Kansas City Southern.
Canadian Pacific on Saturday rejected a ruling by the US Surface Transportation Board, which oversees the freight rail, that a waiver of strict rules governing the merger granted to Kansas City Southern in 2001, Kansas City and Canadian Pacific Will apply to the merger of.
The pre-2001 rule judges the proposed merger as to whether it will adversely affect competition. Under the rule introduced in 2001, rail merger applicants would have to show that the proposed tie-up would be in the public interest. Kansas City Southern was exempted based on its small size.
STB confirmed on Friday that the exemption was granted to Kansas City Southern in 2001, applicable to the proposed favorable combination of the two companies. Both companies expect the STB review to be completed by mid-2022.
According to the regulator, the merger would result in the smallest class I railroad, which would be based on US operating revenue and would also result in some overlapping routes. After the Canadian national rival offered $ 33.7 billion for Kansas City Southern on Tuesday, CP said it would not raise its bid.
Canadian National Railways said in a statement on Saturday that it was ready to join with Kansas City to finalize the merger agreement and welcomed the determination by the board of Kansas City Southern. Canadian Pacific said in response, the Kansas City Southern Board was only fulfilling its obligations under the merger agreement with CP and fulfilling the “fiduciary duty” to its shareholders by assessing the Canadian national proposal.
“Reuters”
