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CSAFE Global



CP 2Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) ("CP") today announced that more than 130 stakeholders have filed statements with the Surface Transportation Board (“STB”) requesting the STB reject Canadian National’s (“CN”) proposed use of a voting trust.

This brings the total letters submitted to more than 960, including 250-plus expressing concern about CN and Kansas City Southern’s (“KCS”) combination, its use of a voting trust, or both, and more than 730 in support of CP-KCS.

The opposition letters – from a range of stakeholders including shippers, ports, local governments, transportation associations and other stakeholders – highlight the extensive risks the proposed CN-KCS voting trust poses to competition by reducing shipper options. Stakeholders also expressed strong concerns over the likelihood of reduced service quality and infrastructure investments as a result of the proposed CN transaction.

These concerns echo those of the Department of Justice (“DOJ”), which on May 14 filed comments with the STB objecting to CN’s proposed use of a voting trust on the grounds that a CN merger with KCS would pose greater risks to competition than the CP-KCS agreement.

CN’s recent announcement that it intends to “divest” KCS’ 70-mile line between New Orleans and Baton Rouge (but still retain full operating rights) fails to address these concerns. For example, this token divestment would not begin to address the competitive issues in the rail corridors running north from Louisiana and Mississippi through America's heartland, where KCS and CN have historically competed; nor would it address many shippers and stations that are today served by both KCS and CN in markets like Omaha/Council Bluffs, Jackson, MS, Springfield, IL, and St. Louis.

CP-KCS is the only viable Class 1 combination and has received overwhelming support across the transportation supply chain. As previously announced, CP intends to proceed with its STB application process to acquire KCS. CP believes that pursuing its application is in the best interests of both KCS and the public so that the pro-competitive CP-KCS transaction can proceed to be reviewed by the STB and – in the event KCS' agreement with CN is terminated or CN is otherwise unable to acquire control of KCS – a potential acquisition of KCS by CP could be implemented without undue delay.

Importantly, the STB has already approved CP's use of a voting trust and affirmed KCS' waiver from the new rail merger rules it adopted in 2001 because a CP-KCS combination is truly end-to-end and pro-competitive. CP stands ready to reengage with KCS.

CSAFE Global




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