Kansas City Missouri USA - KCS has reaffirmed its support for CN's takeover bid, but said it may delay a shareholder vote on the deal next week if a U.S. regulator doesn't rule on a key voting trust soon.
 
The railway said if the U.S. Surface Transportation Board (STB) does not release its decision on the voting trust by 17 Aug 2021 then it would push the vote scheduled for 19 Aug 2021 to a later date to give shareholders time to consider the decision.
 
The trust would allow KCS to remain independent while a full review of the transaction is conducted, but allow shareholders to be paid without having to wait for a final decision on the deal.
 
The STB, which regulates the U.S. rail industry, has said it will make a decision on whether to allow CN to use the trust by the end of August.
 
The KCS board said it stands by CN's proposal despite a sweetened bid by CP earlier this week.
 
KCS says the CP's new offer, which is up from its bid earlier this year, did not constitute a "superior proposal" to the CN.
 
CP's offer valued at US$31 billion is less than CN's proposal valued at US$33.6 billion, with both proposals including about US$3.8 billion in debt, but CP says its offer comes with less risk for shareholders because it is more likely to be approved by regulators.
 
The KCS board said it believes the CN deal could be approved.
 
"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."
 
CP has argued that CN has too much overlap with KCS in routes, while CP already has its use of a voting trust approved.
 
DBRS Morningstar said in a note Friday that CP's revised bid, up US$2 billion from one it reached with KCS in March, should have no additional credit impact on the railway.
 
Author unknown.