On Tuesday, the US STB (Surface Transportation Board), a federal, bipartisan and independent adjudicatory board headquartered in Washington DC, had jumbled a proposed ‘voting trust’ by Canadian National Railway for a $29 billion buyout deal to take over US railroad operator Kansas City Southern (KCS), dealing a major blow to Canadian National which has been locked in a ratting takeover battle with its smaller rival Canadian Pacific over KCS.
The US STB said in a statement, “The Board finds that the proposed use of a voting trust in the context of the impending control application does not meet the standards under the current merger regulations,” ostensibly leveraging Canadian Pacific’s buyout deal of $27 billion.
Followed by the decision from US STB, shares’ prices of KCS tumbled 3 per cent and wrapped up the day 4.04 per cent lower to $281.77 apiece, while the US-listed shares of Canadian National jumped over 5 per cent and rounded off the session 6.56 per cent higher to $116.91 per share.
US regulator rejects Canadian National’s voting trust for KCS takeover
Although the US rail regulator had rejected Canadian National’s voting trust over a takeover of KCS, a proposed voting trust for Canadian Pacific’s $25 billion takeover bid for KCS had been approved by STB back in March, however, the deal was trumped later by Canadian National.
Nonetheless, earlier this month, Canadian Pacific had raised its KCS takeover bid to $27 billion on anticipation that a growing anti-trust concern over a Canadian National and KCS merger in effect would proffer it an upper hand over the deal.
However, later Kansas City Southern had rejected Canadian Pacific’s takeover bid of $27 billion, compounding the narratives further. Adding further strains, Amtrak, majority owned by the US Government, had thrown a sharp rebuke over the planned voting trust for Canadian National’s takeover of KCS citing that Canadian National’s pledge to divest the Baton Rouge to New Orleans route would harm future passenger services in Louisiana.