Bid for Kansas City Southern faces uncertainty

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Canadian National (CN) Rail’s deal has run into regulatory hurdles with the US Surface Transportation Board (STB) having denied its motion for approval of a voting trust earlier this week. Kansas City Southern’s Board of Directors, in consultation with its financial and legal advisors, maintains CN’s proposal is superior to Canadian Pacific (CP) Railway’s proposal. CN  is preparing to file a renewed motion for the STB to approve its proposed voting trust. Last week, the US Department of Justice said that CN’s bid for Kansas City appears to pose greater risks to competition. CP declined to counter CN’s offer. Canadian National has to prove that its deal would be in the public interest, while Canadian Pacific merely has to establish that its tie-up wouldn’t hurt competition.

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