Rail transport: The battle increases between the CP and the CN over the purchase of KCS

Competing bids for the South American Kansas City Railroad have received a boost in recent days, complicating the fight between Canada’s two largest railways.

US transportation regulatory authorities have confirmed that a waiver stipulated in the 2001 merger rules applicable to Canadian Pacific Railways, therefore a potential merger with KCS will not necessarily raise concerns. The same concerns and risks as other mergers.

The US Surface Transportation Board (STB) indicates that a merger of CP and KCS would result in less interference than any other merger between two Class I railroad lines.

Meanwhile, KCS’s board of directors unanimously decided on Saturday that the Canadian National Railways (CN) bid, of $ 325 per KCS share, could lead to a superior proposal and agreed to begin negotiating with the Montreal carrier. CN’s bid is valued at $ 33.7 billion, while its competitor in Calgary is valued at $ 25 billion.

Analyst Benoit Poirier, of Desjardins Capital Markets, said the US carrier’s decision to start discussions with CN was justified, given the show’s financial superiority. “These developments increase the likelihood that CP will have to improve its offerings to KCS,” Mr. Poirier continued, adding that the regulatory risks of CN bidding were higher than that of CP’s, which should be anticipated. Listen to KCS advice.

The CP’s senior boss said last week that his railroad had no plans to improve its offering at this time, as he believed competitive concerns over the CN proposal would prevent it from being approved.

CN said Monday that more than 400 shippers and stakeholders have submitted letters to STB supporting its proposed merger with KCS, while hundreds of others have supported CP.

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