Kansas City Southern’s (KCS) board of directors have reaffirmed its recommendation to KCS shareholders to vote in support of the end-to-end merger with Canadian National Railway (CN).
This comes after the board reviewed the deal in consultation with financial and legal advisors.
The company stated that the unsolicited proposal received from Canadian Pacific Railway (CP) this week to take over KCS in a cash-stock deal is not a “Company Superior Proposal” to its agreement with CN.
At present, CN and KCS’ joint voting trust application is under evaluation by the Surface Transportation Board (STB).
On 10 August, the STB stated that it is planning to issue a decision on the use of the CN voting trust by 31 August.
Soon after concluding the voting trust, KCS shareholders will receive the merger consideration.
The deal will be subject to receipt of KCS shareholder approval as well as Mexican regulatory nod.
Last month, CP had asked KCS shareholders to vote against the proposed merger of KCS and CN at a meeting which is scheduled to take place on 19 August.
In statement, KCS said: “The KCS Board of Directors has determined, with the concurrence of CN, that if the STB has not released a public decision by August 17, 2021, at 6:00 p.m., Central Time, the Special Meeting will be adjourned to give all shareholders and the Board time to receive and consider the STB decision.
“If the meeting is adjourned, the Board will announce the date on which it will reconvene the meeting.”
In May this year, CN and KCS signed a definitive merger agreement to establish an express route linking the US, Mexico and Canada under a single ownership.
The agreement was valued at almost $33.6bn, with the total transaction value including the assumption of almost $3.8bn of KCS debt.