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Prior to Grupo TMM S.A.'s shareholders voted Aug. 18 on Kansas City Southern's proposed purchase of TMM's 38.4 percent stake in TFM S.A. de C.V., KCS officials expected a positive outcome.

"Until we read about TMM's announcement in a news report, officers of TMM had assured us that shareholder approval was certain," said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. "In TMM's Aug. 18 press release, it announced that TMM shareholders 'unanimously' voted against the sale as had been agreed to previously. What TMM's press release did not disclose, and what has not been thoroughly reported, is that the Serrano and Segovia families control
the vast majority of TMM stock."

TMM chairman Jose Serrano and TMM CEO Javier Segovia signed acquisition agreements on behalf of TMM and were obligated under the agreements to recommend approval of the sale to their shareholders, Haverty said.

"Apparently Messers Serrano and Segovia rejected their own advice and voted against the agreements," he said.

KCS notified TMM that it intends to move forward with the acquisition agreements, and advised them of its plan to exercise all legal and administrative means available to protect its agreement rights.

"We believe the transaction agreements as agreed to by both parties are still in force and still binding upon the parties," said Haverty. "Both parties are obligated to exercise good-faith efforts to achieve the agreements' approval and the transaction's consummation."

On Aug. 25, TMM announced its board formally notified KCS that the company is terminating plans to sell its TFM stake to KCS. TMM also notified the Mexican Foreign Investment Commission that the sale has been terminated and the application "is now without substance," according to a prepared statement.