The U.S. Surface Transportation Board (STB) has rejected a key part of Canadian National Railway's (CNR.TO) proposed takeover of Kansas City Southern (KSU), leaving the future of the $33.6 billion deal in question.
The STB rejected CN's proposed use of a voting trust that would allow the company to hold and operate KCS as it waits for additional regulatory approvals.
"The board has determined that the proposed voting trust is not consistent with the public interest standard under the board’s merger regulations," the STB said in a statement released Tuesday. The STB also said that the use of a voting trust "would give rise to potential public interest harms relating to both competition and divestiture."
The ruling is a blow to CN, which had hoped to merge with KCS to create the first railway in North America connecting Canada, the U.S. and Mexico.
The decision could also breathe life into Canadian Pacific's (CP.TO) bid for the railway, which KCS rejected in favour of the pricier offer from CN.
CP submitted a new $31 billion stock-and-cash bid for KCS earlier this month, an offer that fell short of CN's. CP chief executive Keith Creel opted not to engage in a bidding war – something he said would have been "destructive to CP shareholders" – and argued that his company's bid offered more regulatory certainty. The STB has already approved CP's voting trust.
The STB received submissions from shippers, labour groups, the U.S. Department of Justice and CP raising concerns about CN's voting trust.
CN had argued that the voting trust would serve the public interest by "preserving the board's ability to consider the significant public benefits that would flow from a CN-KCS combination."
More to come.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
CN Rail dealt blow by U.S. in takeover fight for Kansas City Southern - Yahoo Canada Finance
Read More
Tidak ada komentar:
Posting Komentar