By Justin Franz
MONTREAL — Canadian National is not giving up its bid for Kansas City Southern despite one of its largest shareholders calling the move “negligent and hugely irresponsible.”
On Wednesday, just a day after TCI Fund Management published an open letter to CN officials asking that they walk away from a deal with KCS, CN CEO JJ Ruest said he was “committed” to putting the two Class Is together, regardless of the challenges ahead. Ruest made the comments at a Bank of America investor conference.
“Ultimately, what we’re putting together may be a bold move, but a bold move is what is required right now,” Ruest said, according to Yahoo News.
Last week, KCS’ board announced it would take CN’s offer over one proposed by competitor Canadian Pacific. Despite that news, CP said it is still committed to merging with KCS and that it has a superior offer that can actually get approved by the U.S. Surface Transportation Board. CN is offering $33.6 billion and CP is offering $29 billion.
On Monday, the STB stated it would apply a newer, more robust set of rules to a CN-KCS merger to ensure it is in the public’s best interest. The board also denied an initial request by CN to use an independent voting trust to hold KCS while the STB reviews the transaction. The board said the request to use an independent voting trust — which is identical to one the STB is letting CP use if it moves forward with a merger — was incomplete. On
Tuesday, CN filed a revised motion to use an independent voting trust.
If the STB does not let CN purchase and then put KCS into an independent voting trust it could put the entire deal into jeopardy.