KCS delays stockholder vote on CN merger plan

Kansas City Southern yesterday adjourned its special meeting for KCS stockholders to vote on the merger agreement with CN until Sept. 3.

All stockholders of record of KCS common stock and KCS 4% noncumulative preferred stock as of the close of business on July 1, 2021, will be entitled to vote their shares at the meeting, KCS officials said in a news release.

CN and KCS’ joint voting trust application is under review by the Surface Transportation Board (STB). KCS officials previously announced that if the STB had not released a public decision by Aug. 17, the special meeting would be adjourned to give stockholders and the KCS board time to receive and consider the STB decision.

The STB on Aug. 10 announced that it expects to issue a decision on the use of the CN voting trust no later than Aug. 31.

KCS and CN officials “are confident that the voting trust meets all the standards and the public interest test set forth by the STB and believe that it should be approved,” the news release stated.

KCS stockholders will receive the merger consideration immediately upon the closing of the voting trust, which is also subject to receipt of KCS stockholder approval and Mexican regulatory approvals, company officials said.

Meanwhile, Canadian Pacific, which on Aug. 10 made a counter proposal to acquire KCS, praised the KCS decision to adjourn the special meeting of stockholders to Sept. 3.

"Delaying the stockholder vote also means KCS stockholders won't become locked into a CN-KCS combination and then unable to consider other, better options like CP's Aug. 10 proposal, which remains outstanding," CP officials said in a news release.

KCS rejected CP’s Aug. 10 counter proposal.

CP has urged the STB not to approve CN’s proposed use of a voting trust because CP officials believe the trust would be anticompetitive and not in the public interest. CP officials have stated that a CP-KCS combination would enhance competition and strengthen the North American rail network connecting Canada, the United States and Mexico.

"CP also believes that once the STB rules on the CN voting trust proposal, the Aug. 10 CP offer ought to be deemed superior as the CP-KCS combination has regulatory certainty as a result of the STB's [prior] approval for CP's use of a voting trust," CP officials said.