CP responds to CN's contention that STB apply same standards to voting trust proposals

Canadian Pacific yesterday filed a letter with the Surface Transportation Board (STB) to address CN's contention that its voting trust proposal should be reviewed under the same standards and processes as CP’s regarding a proposed acquisition of Kansas City Southern.

Last week, the STB ruled that a waiver provision under federal regulations applies to the potential transaction between CP and KCS. The 2001 regulation granted a waiver allowing a merger involving KCS and another Class I  to be considered under the STB’s pre-2001 merger regulations, subject to the board’s review.

In late March, CP and KCS agreed to a merger deal in which CP would acquire KCS stock in a cash transaction worth $29 billion, including about $3.8 billion of outstanding KCS debt. A few weeks later, CN came in with what it characterized as a “superior” proposal to combine with KCS in a cash-and-stock transaction valued at $33.7 billion.

In April 27 letter to the STB, CP noted that CN has asked regulators to subject a voting trust arrangement proposed by CP to the same preview process and standards that govern CN’s proposed voting trust in a transaction with KCS.

CN's position is "fundamentally at odds with the very different factual contexts of the two voting proposals," CP officials wrote. "Accordingly, we respectfully submit that the Board should proceed to review each of the pending voting trust proposals under the different regulatory review processes and standards applicable to each of them."

CP’s letter to the STB can be read here.