The tug-of-war between Canadian Pacific Railway (CP) and Canadian National (CN) for a merger with U.S. freight railway Kansas City Southern (KCS) continued this week, as CP offered a new merger proposal and KCS subsequently delayed a shareholder vote slated for later this month pending input from the U.S. Surface Transportation Board (STB).
On Tuesday, CP submitted an offer to acquire KCS in a stock and cash transaction of approximately $31 billion, saying the deal represents superior terms to its March merger proposal, which was ultimately rejected by KCS in favor of a $33.6 billion bid from CN. The CN/KCS deal is pending approval of its voting trust agreement from the STB, which has said it will issue its decision by August 31. KCS said Thursday it intends to adjourn its special meeting of shareholders slated for August 19 if the STB decision is not issued before August 17. The moves mark yet another bump on the road to creating a continuous rail network spanning the North American continent and connecting Canada, the United States, and Mexico.KCS also said Thursday that its board of directors unanimously determined that the proposal from CP does not constitute a superior proposal to its agreement with CN, and that the board continues to recommend shareholders vote for the proposed transaction with CN. Delaying the August 19 stockholder vote pending the STB decision will give “all shareholders and the Board time to receive and consider the STB decision,” KCS also said. In a separate statement Thursday, CP officials applauded the move to delay the stockholder vote and reaffirmed its assertion that the CN/KCS deal would be anti-competitive.
