KCS Shareholder Vote May be Delayed

The Kansas City Southern board of directors has voted to delay a vote of shareholders on merging with Canadian National until after federal regulators decide on whether CN can place KCS into a voting trust.

The U.S. Surface Transportation Board has said it will rule on the voting trust proposal by Aug. 31.

The KCS board had set an Aug. 19 vote of shareholders on CN acquisition but said it would delay that vote if the STB has not ruled on the voting trust matter by the end of the business day on Aug. 17.

The board had earlier voted to recommend that shareholders accept CN’s offer.

In voting to delay the shareholder vote the KCS board said it wanted to give shareholders ample time to receive and review the STB voting trust decision.

At the same time, the KCS board said it has rejected a proposal by Canadian Pacific to acquire KCS.

CP had offered to buy KCS last spring and the KCS board had accepted that offer only to reverse course after CN stepped in with a significantly larger offer

Trade publication Railway Age cited an unnamed source that CP’s latest offer was a “strategic move” that succeeded in getting the KCS board to delay the shareholder vote on accepting the CN offer.

In making its second bid for KCS, CP had argued that there was too much regulatory uncertainty surrounding the CN-KCS merger for shareholders to accept the CN offer now.

CP has been arguing for some time that the CN-KCS combination will not win STB approval as proposed.

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