On Tuesday, Canadian National unveiled a US $ 33.7 billion cash and equity offer for KCS, based in Kansas City.
The value of his bid exceeds the value of the friendly bid made last month between CP and KCS, which is US $ 25 billion.
Given the more serious public interest concerns raised by CN’s proposed acquisition of KCS, CN’s suggestion that its proposal should receive the same regulatory treatment as the CP-KCS transaction is incorrect.CB said in a press release on Wednesday ahead of its annual shareholders’ meeting.
While the deal with Canadian Pacific raises none of the questions that prompted new merger rules in 2001, the CN proposal raises them all, particularly with regard to competition and merger concerns.
CP believes that the CN-KCS merger
Destabilization The equilibrium of the North American railway network that has prevented further amalgamation of the six largest railroads for two decades, adding that this would place the CP at a disadvantage by making it
Player very much In North America.
The CP has asked the U.S. Road Transportation Board (STB) to rule that its association with KCS qualifies for the exemption granted by the regulator to KCS in 2001 from the stricter policy merger rules adopted to protect competition.
He added that the STB should make it clear that the CN bid would not qualify for the same exemption.
CN submits applications to STB
For its part, CN announced that it informed STB of its intention to obtain permission to merge with KCS under the current merger rules and to allow the use of a voting fund that would allow KCS shareholders to receive a full matching payment without having to wait. For final approval of the transaction by STB.
We believe STB and our customers will realize that CN is the best solution for the continued growth, development and prosperity of the North American economy.CN CEO Jean-Jacques Roest said in a statement.
CN has made an outstanding offer and is committed to meeting the current STB merger rules. CN expects STB to agree to vote confidence, which will allow KCS shareholders to crystalize the value of its US and Mexican network; The STB may then conduct the necessary in-depth review after the vote trust closes.
The company said it is confident it can handle all reasonable handling issues and has said it supports the review of STB under the modern rules, instead of
Four-decade-old rules apply to virtually all parties who have applied to STB.
KCS’s railroad assets in Mexico have made the carrier an enviable takeover target for a long time.
The merger between CN and KCS will constitute the third largest Class A railroad in North America by revenue, while the merger between CP and KCS will form the smallest of the remaining six railroad lines.
There was only a brief indication of the proposed merger with KCS at the CP’s annual meeting Wednesday morning, as shareholders voted 99% in favor of the stock split decision to issue five new CP shares for every existing stock.
Canadian Pacific is due to release its second-quarter financial results on Wednesday after the markets are closed.