CP-KCS Wants Merger Reviewed Within 10 Months

Canadian Pacific and Kansas City Southern want U.S. regulators to review their planned merger within a 10 month time frame that will begin in late June.

The two Class 1 railroads said this week they expect to file a merger application with the Surface Transportation Board around June 28.

CP acknowledged last weekend its plans to buy the smaller KCS and thus create the first Class 1 railroad to United States, Canada and Mexico.

In a filing with the STB, the CP and KCS said they are proposing that regulators follow the blueprint for review that was followed for the last Class 1 merger, the 1999 acquisition by Canadian National of the Illinois Central.

In their filing the two smallest North American Class 1 systems said they propose to offer new single-line service linking Canada and the U.S. Northeast and Upper Midwest with the Gulf Coast, Texas, and Mexico.

The two railroads noted that their merger will be similar to that of CN and IC in that it will be an end-to-end merger with no overlapping routes.

The CP-KCS filing also suggested that regulators could complete their review in six months.

CP CEO Keith Creel said he expects the CP-KCS combination to be approved by regulators because the deal is pro-competitive.

In the meantime, other Class 1 systems have said they are still studying the proposed merger.

“We are assessing the proposed acquisition now to ensure we have a thorough understanding of the potential impacts,” said Norfolk Southern spokesman Jeff DeGraff.

“We will advocate diligently for the interests of our customers and shareholders as the transaction moves through the regulatory review process, with a particular emphasis on protecting the current and strategic value of our Meridian Speedway joint venture with Kansas City Southern.”

The latter comment was a reference to a 320-mile joint venture between Meridian, Mississippi, and Shreveport, Louisiana, in which NS holds 30 percent while KCS has a 70 percent stake.

The Meridian Speedway is the the shortest route between the Southeast and Southwest.

BNSF and Union Pacific indicated they, too, are reviewing the deal and declined further comment.

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