Kansas City Southern (NYSE:KSU) has formally rejected this week’s revised bid from Canadian Pacific Railway (TSX:CP) and said it will delay a shareholder vote to approve a $30-billion U.S. acquisition by Canadian National Railway (TSX:CNR) if the U.S. rail regulator hasn’t decided on the deal by August 17.
The decision to wait for the U.S. Surface Transportation Board to make a ruling comes after CP Rail made a second, higher bid for Kansas City Southern on August 10.
CP Rail’s revised offer of $27 billion U.S. is still below Canadian National’s offer of $30 billion U.S., and Kansas City Southern urged its shareholders to approve the CN deal at an August 19 shareholder meeting.
The Surface Transportation Board, which has sole authority for approving U.S. rail mergers, has said it plans to rule by August 31 on Canadian National’s petition for a voting trust, a financial mechanism in which Kansas City Southern’s shareholders would be paid even while the merger approval is pending.
If the regulator doesn’t rule by 7 p.m. on August 17, Kansas City Southern said it will move back the date for the vote in order "to give all shareholders and the Board time to receive and consider the (regulator’s) decision."
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