KC Southern stands by CN, warns it will delay vote if regulators don't make decision by Tuesday
TORONTO - Kansas City Southern is delaying a shareholder vote on Canadian National Railway Co.'s takeover bid until Sept. 3 as it continues to wait for a U.S. regulator to rule on a key voting trust.
The vote was set for Thursday, but the U.S. railway said it will wait until after the decision by the U.S. Surface Transportation Board to hold the vote.
The U.S. railway regulator has said it expects to release its decision on the voting trust by the end of August.
The trust would allow KCS to remain independent while a full review of the transaction is conducted, but allow shareholders to be paid without having to wait for a final decision on the deal.
“KCS and CN are confident that the voting trust meets all the standards and the public interest test set forth by the STB and believe that it should be approved,” KCS said in a statement.
The KCS board is backing the CN proposal over a rival offer by Canadian Pacific Railway Ltd.
CN's offer is valued at US$33.6 billion, while CP Rail has made a bid valued at US$31 billion. Both proposals include the assumption of about US$3.8 billion of KCS debt.
However, CP Rail, which already has its use of a voting trust approved, has said its offer comes with less risk for shareholders because it is more likely to be approved by regulators.
“A CP-KCS combination would create more competition - not less - in the freight rail industry and would be better for Amtrak,” CP Rail said in a statement Thursday.