KANSAS CITY, Mo. — Kansas City Southern shareholders will vote on the proposed merger with Canadian National on Sept. 3.
KCS this morning convened and adjourned its previously scheduled special meeting of shareholders, delaying the vote in the absence of a Surface Transportation Board decision on CN’s request to put KCS into a voting trust while the merger is under regulatory review.
Last week KCS said it would postpone the meeting until the STB issues a voting trust decision. The STB says it will rule on the matter no later than Aug. 31.
The voting trust is a key step in creating the first railroad linking Canada, the U.S., and Mexico. If the board does not approve the voting trust, analysts say it’s unlikely the merger would proceed.
“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. “KCS stockholders will receive the merger consideration immediately upon the closing of the voting trust, which is also subject to receipt of KCS stockholder approval and Mexican regulatory approvals.”
CN is offering KCS investors the equivalent of $325 per share. Last week merger rival Canadian Pacific sweetened its offer to $300 per share.
CP says its offer comes with regulatory certainty because the STB in May approved its request to place KCS into a voting trust and would judge a CP-KCS merger under the less stringent pre-2001 merger rules.
KCS last week said CP’s $31 billion offer fell short of the $33.6 billion deal reached with CN in May.
“CP believes that once the STB rules on the CN voting trust proposal, the Aug. 10 CP offer ought to be deemed superior as the CP-KCS combination has regulatory certainty as a result of the STB’s approval for CP’s use of a voting trust,” the railway said in a statement.
— Updated at 10:15 a.m. CDT with CP statement.
