Kansas City Southern’s board rejected this week’s bid from Canadian Pacific Railway Ltd. and said it plans to delay a shareholder vote to approve a US$30 billion acquisition by Canadian National Railway Co. if the U.S. rail regulator hasn’t made a key decision on the deal by day’s end on Aug. 17.
The decision to wait for the U.S. Surface Transportation Board to make a ruling comes after Canadian Pacific made a second, higher bid for Kansas City Southern on Aug. 10. That bid of US$27 billion is still below Canadian National’s offer, and Kansas City Southern urged its shareholders in a statement Thursday to approve the CN deal at a Aug. 19 shareholders meeting.
The STB, which has sole authority for approving U.S. rail mergers, has said it plans to rule by Aug. 31 on Canadian National’s petition for a voting trust, a financial mechanism in which Kansas City Southern shareholders would be paid even while the merger approval is pending.
If the STB’s ruling doesn’t come before 7 p.m. New York time on Aug. 17, Kansas City Southern said it will move back the date for the vote “to give all shareholders and the Board time to receive and consider the STB decision.”
The two Canadian railways’ U.S. shares were unchanged in after-hours trading. Kansas City Southern shares were little changed.
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