Surface Transportation Board Says No to Voting Trust for CN-KCS Merger

The Surface Transportation Board (STB) has unanimously rejected the option of a voting trust for the proposed combination between Canadian National and Kansas City Southern.

The STB said it has determined “that the proposed voting trust is not consistent with the public interest standard under the Board’s merger regulations”. In response, Canadian National said it was “disappointed in the STB’s decision” and was now “evaluating the options available”. CN also said it continued “to believe that the combination of CN and KCS would enhance competition, expand North American trade and power economic prosperity, provide new and faster routes, increase supply chain efficiency and deliver other benefits to the public good”.

The STB took into account supporting and opposing letters filed by shippers, rail carriers, labour unions, elected officials and other stakeholders. Naturally, Canadian Pacific was among the most vocal opponents to the voting trust being approved, since it too is trying to combine with KCS. For that proposed merger the STB had approved the use of a voting trust.

Keith Creel, CP's President and CEO, said:

“The STB decision clearly shows that the CN-KCS merger proposal is illusory and not achievable. Knowing this, we believe the August 10 CP offer to combine with KCS [...] ought to be deemed a superior proposal. Today, we have notified the KCS Board of Directors that our August 10 offer still stands to bring this once in a lifetime partnership together.”

The National Rail Passenger Corporation, Amtrak, also opposed the voting trust and expressed its support for the STB’s decision.

Amtrak said in a statement:

““Amtrak appreciates the Board’s rejection of CN-KCS voting trust, which agrees with our Amtrak filing that, as proposed, it would not be in the public interest.”

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