The Surface Transportation Board (STB) has found that formal board review of the voting trust agreement for use in connection with the proposed transaction between Canadian Pacific Railway and Kansas City Southern Railway is warranted.
In the decision, the board determined that the proposed arrangement is acceptable with certain modifications, STB officials said in a press release.
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Canadian Pacific yesterday filed a letter with the Surface Transportation Board (STB) to address CN's contention that its voting trust proposal should be reviewed under the same standards and processes as CP’s regarding a proposed acquisition of Kansas City Southern.
Last week, the STB ruled that a waiver provision under federal regulations applies to the potential transaction between CP and KCS. The 2001 regulation granted a waiver allowing a merger involving KCS and another Class I to be considered under the STB’s pre-2001 merger regulations, subject to the board’s review.
In late March, CP and KCS agreed to a merger deal in which CP would acquire KCS stock in a cash transaction worth $29 billion, including about $3.8 billion of outstanding KCS debt. A few weeks later, CN came in with what it characterized as a “superior” proposal to combine with KCS in a cash-and-stock transaction valued at $33.7 billion.
In April 27 letter to the STB, CP noted that CN has asked regulators to subject a voting trust arrangement proposed by CP to the same preview process and standards that govern CN’s proposed voting trust in a transaction with KCS.
CN's position is "fundamentally at odds with the very different factual contexts of the two voting proposals," CP officials wrote. "Accordingly, we respectfully submit that the Board should proceed to review each of the pending voting trust proposals under the different regulatory review processes and standards applicable to each of them."
CP’s letter to the STB can be read here.© © Trade Press Media Group, Inc.
Canadian Pacific yesterday reported first-quarter 2021 revenue declined to CA$1.96 billion from CA$2.04 billion a year ago, while net income climbed to CA$602 million from CA$409 million.
The Class I posted adjusted earnings per share (EPS) of CA$4.48, up 1% from CA$4.42 a year ago. Operating income declined to CA$780 million CA$834 million in the previous year’s quarter.
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Canadian Pacific yesterday reported first-quarter 2021 revenue declined to CA$1.96 billion from CA$2.04 billion a year ago, while net income climbed to CA$602 million from CA$409 million.
The Class I posted adjusted earnings per share (EPS) of CA$4.48, up 1% from CA$4.42 a year ago. Operating income declined to CA$780 million CA$834 million in the previous year’s quarter.
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Canadian Pacific Railway Ltd. and Kansas City Southern continue to accumulate support for their proposed merger, claiming that more than 375 customers, ports, transloaders and other stakeholders have filed letters of support with the Surface Transportation Board (STB).
The latest supporters include XPO Logistics, CF Industries, Dollarama, Milar Western and Full Circle Ag, CP and KCS officials said in a press release.
Similar to the shippers and others that filed favorable statements and letters with the STB on March 31 and April 6, the new supporters stated they expect the combination of CP and KCS would "invigorate transportation competition, expand access to existing and growing markets and provide new service offerings that wold improve transit times and reliability," the Class Is said.
Many of the supporters also urged the STB to review the transaction as swiftly as possible.
CP and KCS on March 21 announced they've entered a merger agreement in which CP would acquire KCS stock in a cash transaction worth $29 billion, including about $3.8 billion of outstanding KCS debt. Upon STB approval, CP would acquire control of KCS. The new railroad would be called Canadian Pacific Kansas City.
Contact Progressive Railroading editorial staff.
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