Timetable for CN and KCS merger review revealed

NORTH American Class 1s Canadian National (CN) and Kansas City Southern (KCS) have welcomed the Surface Transportation Board’s (STB) decision to issue a timetable for reviewing the voting trust in connection with the companies’ merger agreement.

In a joint statement released on June 8, CN and KNS said “we are happy with the timetable that the STB has set for reviewing our voting trust, marking another important step on the path to creating the premier railway for the 21^st century. We are confident that our voting trust will be approved.”

The railways say the merger will facilitate coordinated investment into new single-line routes and eliminate delays associated with interchanges, reduce cycle and transit times while also providing for more reliable and timely services and offer a more cost-effective access to markets in the south of the United States and Mexico.

The two companies also claim the deal would create an end-to-end merger that provides no risk to competition. In the statement, it is claimed customers will not lose any existing routing options because both CN and KCS are committed to preserving access to all existing gateways and ensuring robust price competition.

The STB’s official public comment period currently remains open until June 28.

However, fellow Class 1 Canadian Pacific Railway (CP), which initially launched a takeover bid for KCS, stated that the voting trust was not in the public interest. It says it’s approval would pre-judge the STB review, would harm competition, would risk CN shifting financial burdens to shippers and pave the way for additional US rail consolidation.

 “The next 20 days will determine the course of competition for US railroading and North American commerce for the next 150 years,” CP said in a statement also issued on June 8.

CP claims more than 130 shippers, communities, labour organisations and other stakeholders have opposed the voting trust approval directly to the STB. The company said it remains confident that the STB will ultimately reject CN’s proposals to use a voting trust.

It also stated that because it believes CN’s agreement with KCS may not be possible, CP was proceeding with preparing its full merger application seeking authority from the STB to acquire control of KCS. The STB has already approved CP’s use of a voting trust.