KCS Spurns CP Again

Canadian Pacific’s second marriage proposal to Kansas City Southern isn’t ending any better than the first one did last spring.

The KCS board of directors on Thursday rejected CP’s latest offer, saying the $31 billion offer falls short of the $33.6 billion deal it accepted earlier from Canadian National.

Shareholders of North America’s smallest Class 1 system are scheduled to vote on Aug. 19 on the CN merger proposal.

That vote could be delayed if the U.S. Surface Transportation Board issues a decision before that date on CN’s proposal to place KCS stock into a voting trust while regulators review the CN-KCS merger.

The STB has said it expects to decide on the voting trust, which has drawn opposition from many quarters, by the end of the month.

It is unclear how CN and KCS will respond if the STB rejects the voting trust. Some railroad industry analysts believe the two would call off the merger, which might give CP yet another opening to acquire KCS.

KCS last March agreed to be acquired by CP. But then CN offered more money and KCS called off the merger with CP in May.

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