CN Rail’s offer to put KC Southern under stricter rules – fr

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CN Rail’s offer to put KC Southern under stricter rules – fr


The Canadian National Railways’ proposal to buy Kansas City Southern will be judged under stricter rules adopted in 2001, the U.S. industry watchdog said on Monday, paving the way for the first major rail merger. in more than 20 years.
The Surface Transportation Bureau also rejected Canadian National’s initial request to use a voting trust for the transaction, saying the petition was incomplete because it referred to a merger agreement that had not been provided. .

The merger rules for Canadian National’s US $ 30 billion offer are different from how the STB plans to deal with a competing US $ 25 billion proposal from smaller Canadian Pacific Railway Ltd. “Result in the least amount of overlapping roads” and his voting trust has already been approved.

The offer proposed by Canadian National “raises issues that the current merger rules were designed to address, namely the potential competitive impacts of a merged entity with some degree of route overlap and direct competition currently. existing, ”the STB said in the decision posted on its website Monday. .

A person uses a mobile device to take photos of a southern Kansas City freight train stopped by a teachers’ union strike near the town of Maravatio, Michoacan state, Mexico, on Tuesday, January 29, 2019. from Michoacan to Mexico have held up virtually all shipments by rail in some areas of the country. Eleven days of protests led to the shutdown of two hundred trains, said Ferrocarril Mexicano SA spokesperson Lourdes Aranda.

Kanasas City Southern shares fell on news of the STB’s move and ended down 3.9% to US $ 297.04 when regular trading in New York closed. Canadian Pacific also fell, down 3.3% on the day, while Canadian National wiped out earlier losses to trade up 0.7% in Toronto.

Last week, Kansas City Southern said it deemed Canadian National’s offer superior and gave CPR until May 21 to improve their offer.

“The ruling against a voting trust and for stricter merger rules to be applied in the proposed acquisition of Kansas City Southern by Canadian National will make a deal more complicated but not impossible to close,” said Lee Klaskow, analyst at Bloomberg Intelligence.

‘Cautious approach’

The agency tightened its monitoring of mergers in 2001, saying that mergers should be in the public interest instead of the standard applied in most previous agreements: that the combination just doesn’t hurt competition. The STB engineered the tougher test after ending a tie-up between Canadian National and BNSF Railroad in 2000, ending a 20-year mergers and acquisitions frenzy that left just seven major railroads. iron in the United States and Canada.

Canadian National said it plans to resubmit its voting trust application, which would allow Kansas City Southern shareholders to be paid even if the two railroads continue to operate separately pending regulatory approval. final. Kansas City Southern said it was a requirement for the US $ 30 billion deal. The STB said in its decision on Monday that it will “take a more cautious approach” to the Canadian National voting trust, which will have to meet the public interest standard.

In a statement, Canadian National called it a “procedural decision” which was “based solely on the fact that a merger agreement for the combination between CN and KCS was not yet available to be filed with the Commission. ”

Canadian Pacific and Kansas City Southern reached a merger deal in March, with the Calgary-based company paying US $ 275 per share in cash and shares. Canadian National exceeded that amount last month.

The two Canadian railroads are vying to be the first company to link tracks across their country, the United States and Mexico, into one railroad. Kansas City Southern, the smallest of the seven major US and Canadian railroads, derives about half of its revenue from Mexico



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