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Kansas City Southern to adjourn planned meeting on CN offer

By | September 1, 2021

Railroad acknowledges CP offer, says it will respond later

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KCS logoKANSAS CITY, Mo. — Kansas City Southern says it will adjourn its scheduled stockholders meeting, which had been set for Friday to consider Canadian National’s merger agreement, as a result of Tuesday’s Surface Transportation Board decision to deny a voting trust while the CN-KCS plan was undergoing regulatory scrutiny.

That meeting is set for 9 a.m. CDT on Friday, Sept. 3. It was originally scheduled for Aug. 19, but was pushed back to await the STB decision [see “Kansas City Southern postpones stockholder vote …,” Trains News Wire, Aug. 18, 2021].

In a statement this morning, KCS also mirrored Canadian National’s reaction to the STB ruling, saying it was disappointed and “working with CN to evaluate the options available to us.” CN released its statement late Tuesday night [see “Federal regulators reject CN plan …,” News Wire, Aug. 31, 2021].

KCS also acknowledged receipt of Canadian Pacific’s merger offer and said it is evaluating it and will respond in due course. CP said Tuesday that its Aug. 10 offer for KCS is still on the table. That offer boosted its original bid by $2 billion to $31 billion, or $300 per share of KCS [see “Canadian Pacific sweetens offer for KCS …,” News Wire, Aug. 10, 2021.]

5 thoughts on “Kansas City Southern to adjourn planned meeting on CN offer

  1. Next few weeks should show if CN has a backup plan after this voting trust denial. Or was this so key to their proposal that they finally cave. Stay tuned.

    Roger Thomas

    1. I think it was largely key to the proposal because KCS required it as part of the merger. I wonder if the voting trust being denied removes KCS’s willingness to go through with an overall merger.

  2. For reasons I forget, the merger with CP can be done under the “old rules”, perhaps because KCS and CP are smaller. So they don’t need a voting trust.

  3. The STB already approved the voting trust for CP/KCS. It is not just because CP is smaller, but also because there is significant overlap between CN and KCS while CP and KCS are strictly end to end. This does not necessarily mean the STB would deny the merger itself, but they can’t close the deal and then seek approval. So KCS’ shareholders will have to wait for merger approval to get their money. If they do approve the merger, the conditions may be more than CN is willing to accept. Since CP has a slightly lower offer on the table that allows the KCS shareholders to get their money now, KCS may prefer to take CP’s offer.

  4. I wonder if KCS accepted CN’s offer on purpose, to get CN to pony up a pile of money for a voting trust that they likely knew would not be OK’d by the STB, thus ensuring KCS a financial windfall from CN, and then going ahaed with the CP merger. Stranger things have happened.

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