You're probably correct, but a "Conrail" sort of solution (splitting it between them), is within the realm of possibilities. As a Conrail stockholder, I was very much opposed to that, but not for financial reasons, as most CR stockholder's were for it...In a May 14 filing with the Surface Transportation Board, the United States Department of Justice has said CN’s application for a voting trust to acquire Kansas City Southern should be denied, because the proposed merger “raises sufficient competition concerns.”www.railwayage.com
CN's initial offer is no good. STB is going to follow DOJ advice here.Your
Time for the next round of offers. My bet: the final result is no merger at all.
More at Progressive Railroading.Kansas City Southern today announced that its board has unanimously determined that the acquisition proposal it received from CN on May 13 continues to constitute a “company superior proposal” under KCS’s pending merger agreement with Canadian Pacific.
As a result, KCS terminated the CP merger agreement and entered into a merger agreement with CN, KCS officials said in a press release.
In connection with the termination of the CP merger agreement, KCS paid CP a breakup fee of $700 million, which will be reimbursed by CN. KCS will be obligated to refund this amount under certain limited circumstances, including if KCS terminates the CN merger agreement to accept a superior proposal.
In response to the KCS board’s decision to terminate the merger agreement, CP officials today said they’ve sent a letter to the STB indicating the company will pursue board review of an application to control KCS.
CP’s letter outlines why it believes that pursuing its STB application is in the best interests of KCS and the public so that the “pro-competitive” CP+KCS combination can proceed to be reviewed, CP officials said in a press release.
“CP intends to proceed to prepare and file its application in this docket seeking [STB] authority to control KCS and its U.S. rail carrier subsidiaries,” the letter states.
------snip----It didn’t take long for Kansas City Southern’s board to consider Canadian Pacific’s sweetened merger offer.
Just two days after CP presented the higher bid, KCS’ board determined it doesn’t constitute a “superior proposal” to CN’s competing bid and could not reasonably be expected to lead to a superior proposal. The board came to that conclusion following a “careful and thorough review” in consultation with outside financial and legal advisors, KCS officials said in a press release.
“The KCS board reaffirms its recommendation to KCS shareholders to vote in favor of the pro-competitive, end-to-end merger with CN, which will create the premier railway for the 21st century and offer unparalleled opportunities and benefits for customers, employees, shareholders, the environment and the North American economy,” they said. “The board recommends shareholders vote for the pending merger with CN.”
However, the special stockholders meeting KCS has scheduled for Aug. 19 to vote on the merger proposals will be postponed if the Surface Transportation Board (STB) does not issue a ruling on the CN-KCS voting trust by the end of business on Aug. 17. The STB recently announced it expects to issue a ruling by Aug. 31.
The postponement would provide shareholders and the board more time to receive and consider the STB decision, KCS officials said. If the meeting is adjourned, a new date will be announced soon, they added.
Kansas City Southern today announced that its board has unanimously determined that the unsolicited proposal received from Canadian Pacific on Aug. 31 to acquire KCS in a cash and stock transaction valued by CP at $300 per KCS share could reasonably be expected to lead to a “company superior proposal” as defined in KCS’s merger agreement with CN.
KCS intends to provide CP with nonpublic information and to engage in discussions and negotiations with CP with respect to CP’s proposal, subject in each case to the requirements of the CN merger agreement, KCS officials said in a press release.
KCS remains bound by the terms of the CN merger agreement, and KCS's board has not determined that CP's proposal in fact constitutes a company superior proposal. In addition, KCS notes that there can be no assurance that the discussions with CP will result in a transaction, the press release stated.
As previously announced on May 21, KCS entered into a merger agreement with CN, pursuant to which CN agreed to acquire KCS in a stock and cash transaction valued at $325 per KCS share based on the CN and KCS closing prices on May 12.
It made sense from the beginning, then the KCS board's eyes lit up with the CN offer. I'm sure CP would like to use a "take it or leave it" approach as the last bidder standing, but bettering the CN offer may act as a "poison pill" that requires them to pay too much.A return to sanity? A logical relationship instead of a way to reduce service.
One article suggested this response to what some board members considered an "irresponsible" overstep in the bid that had more to do with the egos of leadership rather than fiscal responsibility. CP is another story... they had the cash for their original bid. Whether that's still true with an increased expenditure remains to be seen.What I hear is that CN is about to face a hostile takeover by a branch of its Board led by a hedge fund. I think they have suddenly become quite busy with internal squabbles with the management now more focused on saving their own rear ends and jobs.