[110621.EN.BIZ[ CP Tells STB It Will Oppose CN Bid For KCS And Enter Rival Bid

 

THE Canadian Pacific Railway (CP) has issued a statement saying it intends to join 130 shippers, communities, labour organisations and other stakeholders in opposition to the Canadian National Railway's (CN) bid to take over the Kansas City Southern Railway (KCS).

"The next 20 days, and the [Surface Transportation Board's (STB)] subsequent deliberations, will determine the course of competition for US railroading and North American commerce for the next 150 years," said CP.

"CP remains confident that the STB will ultimately reject CN's proposal to use a voting trust. Allowing CN to close into trust would not be in the public interest because its approval would pre-judge STB review, harm competition, risk CN shifting financial burdens to shippers, and pave the way for additional US rail consolidation," said the CP statement.

"CN's arguments in favour of a trust amount to the claim that CN and KCS should be able to decide what is in the public interest based on which railroad is offering more money to acquire KCS - that argument elevates private interests over the public interest," the statement said.

"The Department of Justice has raised serious competitive concerns about CN's proposed voting trust, contending that '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'."

The DOJ further stated that "threats to competition would be present immediately after the CN voting trust is consummated." These threats cannot be overcome by the divestiture CN has proposed because that divestiture would be both too narrow and too late - coming only after the voting trust period would have ended, said CP.

Because CN's agreement with KCS may not be capable of consummation, CP is proceeding with preparing our full merger application seeking authority from the STB to acquire control of KCS.

Source : HKSG.