There’s been yet another twist in the knock-down battle between Canadian rail giants CN and CP to win possession of the sweet US rail company, Kansas City Southern. Early Monday it is reported that the KCS board has ruled that a takeover offer from Candian Pacific Railway Ltd. is a superior proposal to its agreement with Canadian National Railway Co. It had appeared that CN has locked up the KCS deal potentially making it the most powerful rail firm in North America. Now the US railway says it plans to terminate its deal with CN and sign a definitive agreement with CP Rail which has made a proposal valued at about US$31 billion including debt.
Five days to better the deal
But CN still has five business days to make changes to its offer to win back the support of the KCS board. CN’s offer is valued at about US$33.6 billion including debt, but the U.S. Surface Transportation Board dealt it a setback last month when it rejected CN’s plan to use a voting trust to complete the deal, something it approved for CP Rail. The trust would allow KCS shareholders to be paid before the U.S. regulator completes its review of the proposed takeover. CP Rail had signed a deal in March to buy KCS, but CN topped that offer and secured support from the KCS board for its proposal in May. Canadian Press
