MONTREAL — A war of words is heating up between Canada’s two largest railroads over competing bids for Kansas City’s KCS railway.
In a Thursday letter to the U.S. railroad’s board of directors, CN Rail CEO Jean-Jacques Ruest accused Canadian Pacific Railway of distracting investors with “inaccurate and unfounded assertions.”
He says the Calgary-based rival has failed to acknowledge the “clear and substantial superiority” of CN’s cash and share proposal for KCS shareholders. Its proposal is valued at US$33.7 billion or US$325 per share, which is US$50 per share higher than CP’s.
On Wednesday, CP Rail CEO Keith Creel said that while CN’s offer was “eye-opening,” it is unattainable because it can’t win U.S. regulatory approval due to its negative impact on competition.
Creel says a CN-KCS merger would “destabilize” the rail network balance in North America that has prevented further consolidation of the six largest railroads for two decades, adding it would leave CP as a disadvantaged “odd-man-out” in a six-railroad North America.
However, Ruest countered that the relevant railroad regulatory approval condition is approval of the voting trust, something that is identical for both bidders.
“CN is confident that the Surface Transportation Board (STB) will not subject CN’s proposal to any different standard or scrutiny in approving the voting trust than would be applicable to CP’s proposal,” Ruest wrote.
“Both voting trusts are equally likely to be approved. CP’s deliberately misleading claims to the contrary are not correct.”
This report by The Canadian Press was first published April 22, 2021.
