STB Rules Against Voting Trust Agreement in Canadian National-Kansas City Merger

(Photo courtesy Kansas City Southern)

The Surface Transportation Board rejected the use of a voting trust agreement to advance the proposed Canadian National Railway and Kansas City Southern Railway merger, striking a potential blow to the agreement.

“The Board has determined that the proposed voting trust is not consistent with the public interest standard under the Board’s merger regulations,” the agency said in a news release.

In a statement, CN said it was disappointed with STB’s decision and was evaluating its options.

“We remain confident that our pro-competitive, end-to-end combination is in the public interest and that it would offer unparalleled opportunities and benefits for customers, employees, the environment and the North American economy,” the railroad said. “The combined company would create the premier railway for the 21st century and establish seamless single-line service from Canada, through the United States and into Mexico.

“Since the proposed combination with KCS was announced, we have been encouraged by the overwhelming support from both companies’ customers, employees, local communities and shareholders,” CN added. “We continue to believe that the combination of CN and KCS would enhance competition, expand North American trade and power economic prosperity, provide new and faster routes, increase supply chain efficiency and deliver other benefits to the public good.”

Canadian Pacific initially sought to acquire Kansas City, prompting CN to act. The Kansas City Southern Board of Directors eventually determined CN made a better proposal.

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