CP Asks KCS Board to Spurn CN Bid

Canadian Pacific has asked the board of directors of Kansas City Southern to reverse course and reject a bid by Canadian National to buy the company.

CP said in a letter to board members that CN’s merger proposal “is illusory and simply an attempt to dismantle the unique, pro-competitive deal that CP and KCS” agreed to in late March.

The letter, signed by CP CEO Keith Creel, said CP respects the KCS board’s decision to determine CN’s $33.6 billion offer was superior to the $29 billion CP offer.

However, CP argued the U.S. Surface Transportation Board is likely to reject CN’s proposal to use a voting trust of KCS stock given that allowing the trust would not be in the public interest.

Creel also said after KCS received a revised CN proposal, that a number of things have occurred that should lead the KCS board to conclude that CN’s proposal is not “superior” as defined in the CP-KCS merger agreement.

“Respectfully, we feel it would be destructive to our mutual interests to engage in a bidding war in reaction to CN’s illusory offer, particularly where our existing CP-KCS Merger Agreement provides KCS’s shareholders with a significant premium,” Creel wrote.

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