[180621.EN.BIZ] CP Enlists Labour To Block CN Bid To Buy Kansas City Southern

 

THE SMART-Transportation Division (SMART-TD), an AFL-CIO labour federation affiliate, has urged the US Surface Transportation Board (STB) to reject Canadian National's (CN) bid to take over the Kansas City Southern Railway (KCS), according to a press release from Canadian Pacific Railway (CP), which also opposes CN and has submitted a rival bid.

"The approval of the CN voting trust by the STB would be risky for the railway industry and quite possibly will negatively impact our members," said SMART-TD president Jeremy Ferguson in a letter to the STB.

"Approval of the CN voting trust proposal would harm employees of both KCS and CN due to the amount of debt CN will carry and the real possibility that the CN transaction would fail the regulatory test in the end," he said.

"The CN/KCS would be anti-competitive due to the overlap of existing rail lines and affected customers. The CN already has a high capacity mainline route from Chicago straight to New Orleans, therefore with CN acquiring KCS there would be no need for parallel routes," said Mr Ferguson.

"If the CN voting trust and proposed merger were granted approval, we fully expect significant job losses on either CN or KCS because ultimately the transaction would require either a sale or abandonment of duplicative rail lines," he said.

The Transportation Communications Union separately noted railway workers would lose with CN's proposed voting trust. The International Association of Machinists and Aerospace Workers, AFL-CIO, and the Teamsters Canada Rail Conference have also filed letters with the STB opposing the CN/KCS voting trust.

Those labour organisations join more than 130 shippers, communities and other stakeholders writing directly to the STB in opposition to CN's voting trust proposal, said the CP press statement.

Said CP: "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 railway is offering more money to acquire KCS - that argument elevates private interests over the public interest."

CP maintains that a CP-KCS combination is the only viable Class 1 merger that serves the best interests of customers and stakeholders, but also the continent's rail network to enable a new corridor of investment and capacity for the North American economy to grow.

Source : HKSG / Photo : Reuters.