U.S. Regulator’s Rejection of Canadian National Railway’s Bid to Purchase Kansas City Southern Railroad Opens Door, Again, for Possible Canadian Pacific Railway Take Over

With U.S. regulators rejecting a key part of the Canadian National Railway Co’s (CN) bid, the Canadian Pacific Railway Ltd. (CP) has approached the Kansas City Southern Railroad (KCS) board asking them to reaffirm the CP’s interest in taking over the railway. CP Rail has maintained that its $31-billion offer, while worth less than CN’s $33.6-billion proposal, has less regulatory risk. CP Rail has approval for a voting trust structure, and, because of its smaller size and lack of overlap with KCS, it has secured a waiver so that its bid would be judged on the older merger criteria.

The KCS board, which had supported CN’s bid, said Wednesday (9-1-21) it was also disappointed in the decision and that it was working with CN to evaluate options. KCS said it plans to adjourn a special meeting that had been scheduled for Friday for shareholders to vote on the CN proposal. The U.S. railway said it would evaluate CP’s proposal in accordance with the terms of KCS’ merger agreement with CN and respond in due course.