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Rail News Home Canadian Pacific 5/20/2021 Rail News: Canadian Pacific
Canadian Pacific today sent a letter to Kansas City Southern's board calling on members to reject CN’s proposal in light of intervening events and reaffirming its commitment to the pro-competitive CP-KCS combination under the preexisting merger agreement.Written by CP President and Chief Executive Officer Keith Creel, the letter emphasizes CP’s stance that CN's merger proposal "is illusory and simply an attempt to dismantle the unique, pro-competitive deal that CP and KCS" agreed to in late March."While we respectfully disagreed with the KCS board's decision last week to deem the revised CN proposal a company superior proposal, we could understand how the KCS board might come to that decision given its fiduciary duties. Nevertheless, we have remained confident that the Surface Transportation Board (STB) would ultimately reject CN's proposal to use a voting trust, given that allowing CN to close into trust would not be in the public interest," Creel wrote.Creel also noted that after KCS received the revised CN proposal, a number of things occurred that should lead the KCS board to conclude that CN’s proposal is not "superior" as defined in the CP-KCS merger agreement. Those occurrences were the U.S. Department of Justice’s stated concerns about a CN-KCS merger and the STB's decision to apply more stringent merger rules to CN’s proposal."Respectfully, we feel it would be destructive to our mutual interests to engage in a bidding war in reaction to CN's illusory offer, particularly where our existing CP-KCS Merger Agreement provides KCS's shareholders with a significant premium," Creel wrote.To read Creel’s letter in full, click here.

Rail News Home Canadian National Railway - CN 5/19/2021 Rail News: Canadian National Railway - CN
CN yesterday filed with the Surface Transportation Board a request to establish a procedural schedule for review of the voting trust that CN intends to use for its planned merger with Kansas City Southern.CN's filing also includes the merger agreement with KCS that was finalized on May 13, when KCS deemed CN's proposal superior and announced its intention to terminate the previously executed March 21 merger agreement with Canadian Pacific.CN leaders are confident the Class I can gain approval for the voting trust and ultimately close the combination with KCS, and look forward to the STB promptly setting forth its timetable for reviewing the voting trust, they said in a press release.In its filing, CN requested that the STB adopt a procedural schedule for a brief public comment period on CN's voting trust agreement. CN's proposed voting trust structure has been public since April 26, 2021 and has identical terms and uses the same trustee as CP's recently approved voting trust.CN is preparing a renewed motion for the STB to approve its proposed voting trust to be filed on or before May 21. In this filing, the Class I plans to show that the significant public benefits of the transaction can be achieved only through use of a voting trust, and that these benefits substantially outweigh any potential public interest harm, CN officials said.CN will also demonstrate that its strong balance sheet, cash flows and credit ratings profile provide certainty that the company has the financial integrity to satisfy the STB's public interest analysis, they added.CN's filing may be read here.In response to CN’s proposed three business-day comment period on the voting trust, CP sent a letter to the STB stating CN's voting trust timetable is "not constructive and not serious."CP's full letter can be read here.