By Justin Franz
WASHINGTON — Canadian Pacific can’t quit Kansas City Southern.
This week, CP filed more than 130 letters from stakeholders, including shippers, ports, local governments, transportation associations and others, who are concerned about the prospect of a KCS-Canadian National combination. On May 21, two months after CP and KCS revealed they were planning to merge, the American road announced that it was rejecting CP’s offer in favor of a deal with CN.
But CP has not given up its hope to merge with KCS in anticipation that the U.S. Surface Transportation Board will reject it. The federal agency has already said it will apply a stricter set of rules to a CN-KCS merger.
“The opposition letters highlight the extensive risks the proposed CN-KCS voting trust poses to competition by reducing shipper options. Stakeholders also expressed strong concerns over the likelihood of reduced service quality and infrastructure investments as a result of the proposed CN transaction,” CP officials wrote. “These concerns echo those of the Department of Justice, which on May 14 filed comments with the STB objecting to CN’s proposed use of a voting trust on the grounds that a CN merger with KCS would pose greater risks to competition than the CP-KCS agreement.”
CP also noted that while CN said it would sell one KCS line between New Orleans and Baton Rouge that would still not resolve the competitive issues surrounding a CN-KCS deal. Among the markets served by CN and KCS noted by CP were Omaha/Council Bluffs, Jackson, MS, Springfield, IL, and St. Louis.
Since CP and KCS first announced plans to merge, the Canadian road has filed nearly 1,000 letters in support of its deal or against CN’s.