STB Denies CN Bid to Put KCS in Voting Trust

A request by Canadian National to place Kansas City Southern into a voting trust has been denied for now by the U.S. Surface Transportation Board.

CN, which is seeking to buy KCS for $33.6 billion, sought to create the voting trust while the transaction is reviewed by federal regulators.

The STB denied the request by saying CN has not yet filed its merger application and therefore the record is incomplete.

CN said it plans to re-file the voting trust proposal once it completes sending documents to the STB pertaining to its merger with KCS.

The KCS board of directors has accepted CN’s proposal after earlier accepting a bid from Canadian Pacific to buy KCS for $29 billion.

KCS will pay CP a $700 million breakup fee for backing out of its earlier deal with CP although KCS has also given CP a week to make a counter offer to the CN bid.

However, CP has said it will not engage in a bidding war with CN over control of KCS.

The voting trust arrangement will enable shareholders of KCS to receive cash and shares of the acquiring company while the merger review process plays out.

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