[220521.EN.BIZ] Canadian Pacific Scorns CN's Kansas City Southern Counter Bid

 

THE Canadian Pacific Railway (CP) heaped scorn on its rival's, Canadian National (CN) unsolicited counter bid to buy the Kansas City Southern(KCS) railway, reported Canadian Insider.

"It is not surprising that CN would raise its offer, and it only highlights CN's recognition of the significant regulatory risk/challenges associated with its anti-competitive bid," said CP in a statement released to the press.

"There is nothing new here; this doesn't make it any more likely that the CN proposal can close into a voting trust. The Surface Transportation Board (STB) already approved CP's use of a voting trust for its pro-competitive combination with KCS," said CP.

CP also declared that the negotiated agreement is the only true class 1 combination.

"We believe that CP's negotiated agreement with KCS is the only true end-to-end Class 1 combination that is in the best interests of North American shippers and communities. CP-KCS is a once-in-a-lifetime opportunity to not only protect all existing shippers¡¯ options but to inject new competition and capacity into the North American transportation system," said CP.

"As we've said repeatedly, we are not going to enter into a bidding war. Our mutually negotiated agreement with KCS represents compelling short-term and long-term value for shareholders that is actually achievable," said CP.

"We will respond to KCS within the allotted time," said CP.

CP agrees with the Department of Justice (DOJ) objection to CN's proposal of a voting trust, stating that a CN merger with KCS would pose greater risks to competition.

"A CN-KCS transaction poses additional dangers to competition stemming from the potential elimination of direct, 'parallel' competition on routes served by both railroads, for example between Baton Rouge and New Orleans," said the filing.

"On May 6, 2021, the board approved the proposed CP-KCS voting trust in Finance Docket No. 36500. Notwithstanding this decision, the Board should not permit the proposed CN voting trust because CN's proposed acquisition of KCS appears to pose greater risks to competition than the risks posed by a CP-KCS merger," said the filing.

Meanwhile, CP said it remains confident its agreement is the only viable merger for KCS since it's already validated by two rulings from the Surface Transportation Board (STB).

The STB approved CP's use of a voting trust and affirmed KCS's waiver from the new rail merger rules it adopted in 2001.

Source : HKSG.