By Justin Franz 

KANSAS CITY — Kansas City Southern shareholders will not vote this week on a proposal to sell the railroad for $33.6 billion to Canadian National after federal regulators failed to decide on a key provision of the proposal by Tuesday night. 

KCS shareholders were expected to vote on the proposed KCS-CN merger this Thursday. However, last week the railroad stated that they would postpone the vote if the U.S. Surface Transportation Board had not made a call on whether they would let CN place KCS into an independent voting trust pending approval. By letting CN put KCS into a trust, the Canadian road could pay shareholders before the STB actually approved the deal. If the STB were to reject the deal, then CN would have to sell KCS out of trust. 

Observers have said that not letting CN put KCS into trust could put the entire deal into jeopardy. 

KCS set a deadline for the STB’s decision by 6 p.m. Central Time August 17. A new shareholder vote has not yet been scheduled. The STB said it planned on making a decision about the trust sometime this month. 

If the STB lets CN put KCS into trust then shareholders would be paid in the coming months and the actual review of the merger would begin, a process that could last well into 2022. If the STB doesn’t let CN put KCS into trust, it’s unclear what the railroads would do. If the deal were to fall apart, another suitor could be waiting: Canadian Pacific decided last week to up its offer for KCS, two months after the smaller railroad had rejected a lower bid. However, KCS said that the newer bid was not good enough for it to back out of its current plans with CN.