CN (CNI) Issues Statement on STB Decision Regarding Kansas City Southern (KSU) Merger Rules

May 17, 2021 4:32 PM EDT

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CN (TSX: CNR, NYSE: CNI) today issued the following statement in response to the Surface Transportation Board’s ("STB") decision to apply the current merger rules to its review of CN’s superior proposal to acquire Kansas City Southern (NYSE: KCS) (“KCS”):

We welcome the STB’s decision to move forward with reviewing CN’s proposed combination with KCS under the current merger rules, which requires demonstrating that the combination would enhance competition. We requested that the STB review its superior proposal to combine with KCS under these rules because we are confident that a CN-KCS combination will create a safer, faster, cleaner and stronger railway that is ideally positioned to support the growth of an emerging consumption-based economy through better service options and customer choice. CN has received strong support for its combination with KCS as evidenced by the over 1,000 letters of support that have been filed with the STB by customers and other stakeholders. As we have stated before, we are committed to addressing any competitive concerns under the current merger rules in order to successfully complete a CN-KCS combination.

We note that the STB’s procedural decision to defer consideration of our voting trust was based solely upon the fact that a merger agreement for the combination between CN and KCS was not yet available to be filed with the Board. We intend to promptly complete our application as the merger agreement with KCS was finalized on May 13, 2021, the same day that KCS’ Board of Directors announced that our combination was superior and that it intends to terminate its merger agreement with Canadian Pacific Railway Limited (“CP”).

We look forward to the STB promptly setting forth its timetable for reviewing our voting trust. We firmly believe that, once the STB has had the opportunity to undertake a full and fair review of our voting trust, we will have demonstrated that our voting trust is in the public interest. In particular, CN will demonstrate that our strong balance sheet, cash flows and ratings profile will provide certainty that we have the financial strength and integrity to satisfy the STB’s public interest analysis. CN’s proposed voting trust has identical terms and uses the same trustee as CP’s recently approved voting trust and our proposal provides superior and more certain value for KCS shareholders and represents a pro-competitive solution that offers unparalleled opportunities for customers, employees, shareholders, the environment and the North American economy.

Together, CN and KCS will create an express route that connects the U.S., Mexico and Canada with a seamless single-owner, single-operator service, and preserve access to all existing gateways to enhance route choices and ensure robust price competition.

We maintain that we are the better bid, better partner, better railway and best solution for KCS. We remain confident in our ability to close the combination with KCS and look forward to continuing to engage productively and respectfully with the KCS Board to deliver a superior and pro-competitive transaction to CN and KCS’ respective stakeholders.

For more information on CN’s superior proposal to acquire KCS, please visit www.ConnectedContinent.com.



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