Canadian Pacific, Canadian National Clash Over Kansas City Southern
27 April 2021 - 3:22AM
Dow Jones News
By Micah Maidenberg
Canadian Pacific Railway Ltd. cast doubt on Canadian National
Railway Co.'s bid for Kansas City Southern in a letter, the latest
salvo in an ongoing effort by both Canadian railroads to buy the
latter company.
Canadian Pacific Chief Executive Keith Creel said in a letter to
Kansas City Southern Chief Executive Pat Ottensmeyer dated April 23
and released today that there are competitive routes that would be
extinguished if Canadian National and Kansas City Southern
combined.
"I am sure I do not need to belabor the extent of the
competitive overlaps" between the two companies, Mr. Creel said in
the letter. Those flows, he said, from "broadly parallel" routes
the two railways have between Springfield, Ill., and New
Orleans
On Friday, Canadian National described its bid for Kansas City
Southern as "procompetitive" and laid out its case for that
position in a letter to the U.S. Surface Transportation Board, a
federal regulator.
"As the board is well aware, the fiercest and most aggressive
'competitor' to the freight rail industry is the trucking industry,
which has a dominant market share for the transportation of most
commodities - including intermodal traffic," Canadian National said
in the letter.
Both Canadian Pacific and Canadian National have mounted
public-communications efforts where each is detailing their
respective cases for purchasing Kansas City Southern.
Canadian National Railway said earlier this month it bid $33.7
billion in cash and stock to acquire Kansas City Southern, an offer
it said values Kansas City Southern stock at $325 per share.
Last month, Canadian Pacific agreed to pay $275 a share,
including $90 in cash, for Kansas City Southern, a bid valued at
$25 billion.
On Saturday, Kansas City Southern's board said Canadian
National's offer could reasonably be expected to lead to what is
considered a superior offer as defined in its merger agreement with
Canadian Pacific.
The company said it would start sharing nonpublic information
and engage in discussions with Canadian National. Kansas City
Southern remains bound by the terms of its deal with Canadian
Pacific and its board hasn't determined that Canadian National's
proposal does constitute a superior one.
In midday trading on Monday, Kansas City Southern shares dipped
0.08% to $301.54. Canadian National Railway stock increased 0.30%
to $109.19. Canadian Pacific shares rose 0.14% to $371.23.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
April 26, 2021 13:07 ET (17:07 GMT)
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