KCS Acquisition | Both CP and CN are supported

Denise Paglinawan
The Canadian Press

United States Transportation regulatory officials have stressed that the Canadian Pacific Railways have an amnesty applicable to the 2001 merger rules, so the merger with KCS does not necessarily raise concerns. Concerns and risks similar to other mergers.

The US Surface Transportation Board (STB) believes the merger between CP and KCS will result in less overlap than the merger between the two Class I railways.

“If approved, the merger between CP and KCS, the sixth and seventh largest Class I railways, would create the smallest Class I railroad in terms of operating revenue in the United States.” », STB explained.

In the wake of the regulatory body’s decision, CP CEO Keith Creel recommended that KCS President and CEO Pat Ottenmeyer address the regulatory issues raised by the CPR proposal.

“I hope you and your board have a good understanding of all aspects of the competition between KCS and CN,” Mr. Creel wrote in a letter to Mr Ottensmeyer.

Meanwhile, the board of directors of KCS unanimously decided on Saturday that the proposal could lead to a proposal by the Canadian National Railway Company (CN) worth 5,325 per share. Superior and agreed to begin negotiations with the Montreal carrier.

CN supplies are valued at US $ 33.7 billion, while Calgary’s rival is valued at $ 25 billion.

According to the CP, KCS’s review of the CN offer was “solely due to its obligations under the CP Merger Agreement and the fulfillment of a trusted obligation to its shareholders.”

Benoit Poyer, an analyst at Desjardins Capital Markets, argued that the American carrier’s decision to start negotiations with CN was justified, given the financial dominance of the offer.

“These developments increase the likelihood that the CP will be forced to improve its submission for KCS,” Mr. Poyer said, adding that the regulatory risks to CN’s submission were greater than the CP, which was to be expected. Note the KCS advice.

CP’s Bigg Boss last week said he had no plans to improve his offer on the railroad, as he was of the opinion that competing concerns over the CN proposal could be prevented from being accepted.

More than 400 transporters and shareholders have filed letters to STB in support of the proposed merger with KCS, while hundreds have expressed support for CP, CN said on Monday.

“This is huge support for the competitive CN merger,” Railroad said in a statement.

Separately CP opposed CN’s request to appoint a single person as trustee for competitive bids for KCS, saying the two bids were different.

The CP announced in March that it was appointing David Starling, former president and CEO of KCS, as trustee in a merger deal with KCS.