CN Expects to Reach Deal with KCS Soon

Canadian National is confident it will be able to reach an agreement to purchase Kansas City Southern in the next 30 to 40 days.

The KCS board of directors agreed over the weekend that it would consider CN’s $33.7 billion offer.

Earlier KCS had agreed to a $29 billion merger offer from Canadian Pacific.

CN management will review this week confidential KCS data and talk about a final merger agreement with their KCS counterparts.

CP has sought to discourage the CN bid by saying it would be anti-competitive and unable to receive regulatory approval due to broad overlap between the CN and KCS systems in the middle of the country, particularly along the former Illinois Central system that CN owns.

However, CN CEO JJ Ruest has countered that his company’s bid would offer KCS shareholders 21 percent more than the CP deal.

Although CN has acknowledged that its acquisition of KCS would reduce competition between Baton Route and New Orleans, CN Chief Operating Officer Rob Reily said his company will remedy that, indicating one step might be selling some lines in the region to another railroad.

Since CN announced its bid for KCS some 500 letters of support for the CN bid have poured into the U.S. Surface Transportation Board.

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