Canadian Pacific Railway Ltd (CP.TO) (CP) said on Saturday it had filed a formal objection with U.S. regulators that said Canadian National Railway Co’s (C.N) was close to its 30 billion rival bid. The dollar for Kansas City Southern (Kansas) does not qualify for the exemption from stricter merger rules.
Last week, the U.S. Surface Transportation Board (STB) provided a waiver to CP’s $ 25 billion bid for Kansas City Southern, meaning the deal will not be subject to rail merger rules. More stringent than the regulator required in 2001
CP was exempt on a smaller scale, and analysts and shareholders said the STB ruling mitigated regulatory risks to the CP deal.
CP and major Canadian National (CN) rivals are competing to take over the US Railways Kansas City Southern (KCS), which will build the first railroad linking Canada, the United States and Mexico.
One combination is seeking to capitalize on the expected increase in trade after the US-Mexico-Canada agreement was ratified last year.
In a dispute filed with regulators on Friday, CP said CN’s proposal to buy KCS was likely a cause of concern because of its size.
“The combined CN / KCS will greatly expand the size of the fifth-largest US Class 1 railroad and greatly increase the gap between CN / KCS and … CP,” Canadian Pacific said.
CN said it had voluntarily agreed to a transaction with STB-audited KCS under current rules to demonstrate the proactive competitive nature of the deal and to resolve any competitive concerns.
KCS did not immediately respond to a request for comment on CP’s filing with regulators.
CN released an unsolicited cash and stock offer valued at about $ 29.55 billion for KCS after CP agreed to buy KCS for about $ 25 billion in March.
CP had previously said it had not considered adding a proposal. KCS previously said its board of directors had determined that CN’s competing proposals were expected to lead to a “superior proposition”.
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