CN * KCS merger ?

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The rejection of the CN voting trust was clear the moment we knew that the members of the STB were honest.

Now, that didn't necessarily doom the CN merger offer. The voting trust was an attempt to cheat; the merger could still be approved with a sufficient list of divestment conditions (which CN has not yet offered).

But apparently TCI, the activist investor, has bought a bunch of CN stock, is now the second-largest CN stockholder, and disapproves of the merger.

https://www.bnnbloomberg.ca/tci-raises-stake-in-undervalued-cn-rail-may-seek-board-seat-1.1645894
I think the chances of the CN merger deal are pretty low now.
 
Wow, yeeeah, TCI (via Hohn, its main manager) is now calling for the resignation of CN's Chairman (Robert Pace) and CEO (Jean-Jacques Ruest). And they've named their replacement candidate (Jim Vena). This merger is *off*. I'm guessing the CEO of CN will either quietly leave with a golden parachute, or face a proxy fight; he won't have time to think about a merger fight that he's already losing.

Sorry this one is paywalled. Here's two fair use quotes:

"In a letter to the board of CN seen by the Financial Times, the head of TCI, one of the largest shareholders in the Montreal-based company with a 5 per cent stake worth about $4bn, also called for the resignation of CN’s chair Robert Pace and chief executive Jean-Jacques Ruest. TCI has recommended Jim Vena, who has worked at CN in the past and at rival Union Pacific, as the person to run the company."

'“CN should immediately withdraw from its agreement to by KCS,” Hohn told the FT. “The CN board should not proceed without a voting trust because it would be hugely value destructive, cost billions in break fees and would distract management at a time when the business is underperforming. “The CN board has consistently misjudged the STB and the predictions of the board have been consistently wrong. As a result the [CN] board now lacks all credibility and so the chairman and CEO should resign,” added Hohn.'

https://www.ft.com/content/5e4b10ce-5769-4206-a6e0-dfb3cbb3a357
 
I'm glad to see CN effectively out of the battle. Merging with KCS+CP makes far more sense as they'd each have 'T' shaped railroads that compete more or less equally between all major destinations.

Getting the KCS and its Mexico business is the BIG and perhaps the only reason, in my opinion, why CN wanted an essentially redundant north-south route. I'd expect them to divest as much of the KCS as possible while retaining the Mexico business.

If CP gets the KCS, I'd expect them to do whatever they could to link MSP with KCY so trains from western Canada can go south without detouring through Chicago and buying trackage rights to reach KC.
 
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