CP Canadian Pacific Kansas City Limited

   By Stephen Nakrosis 
 

The rival bidders for railroad company Kansas City Southern weighed in on a decision by the U.S. Surface Transportation Board, which was issued Monday.

Both Canadian National Railway Co. and Canadian Pacific Railway Ltd. are looking to acquire Kansas City Southern.

In March, Canadian Pacific said it had agreed to acquire Kansas City Southern in a deal valued at about $25 billion, as reported by The Wall Street Journal. The report said, "Canadian Pacific would create a trust to acquire Kansas City shares later this year, if shareholders bless the deal."

In April, Canadian National made a bid of about $30 billion for Kansas City Southern, also reported by The Wall Street Journal.

On Monday, the Surface Transportation Board said it decided Canadian National's proposed acquisition of Kansas City Southern "will be subject to the agency's current merger regulations and denies a motion to approve a proposed voting trust agreement, without prejudice, as incomplete."

Responding to the board's decision, Canadian National said, "We welcome the STB's decision to move forward with reviewing CN's proposed combination with KCS under the current merger rules, which requires demonstrating that the combination would enhance competition." CN also said it "received strong support for its combination with KCS as evidenced by the over 1,000 letters of support that have been filed with the STB by customers and other stakeholders," and added, "as we have stated before, we are committed to addressing any competitive concerns under the current merger rules in order to successfully complete a CN-KCS combination."

Meanwhile, Canadian Pacific Railway said, "We concur with the STB's decision to apply the new merger rules to the proposed CN transaction." The company also said, "The new merger rules require that the STB formally approve CN's proposed use of a voting trust. Though CN had filed a motion seeking such approval, the STB rejected that motion as incomplete."

Canadian Pacific also said, "With this new ruling by the STB, CP's confidence in the superiority of its friendly agreement with KCS is redoubled."

--Write to Stephen Nakrosis at stephen.nakrosis@wsj.com

(END) Dow Jones Newswires

May 17, 2021 18:48 ET (22:48 GMT)

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