US regulator rejects CN plan for KCS voting trust

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The US Surface Transportation Board (STB) has blocked Canadian National Railway’s proposal to create a voting trust in its bid to acquire Kansas City Southern.  The STB determined that the voting trust “is not consistent with the public interest standard under the board’s merger regulations.”  The STB’s unanimous decision throws into question CN’s US$29.8-billion bid and reopens the option for CP Rail to re-enter the battle to build a network that links Canada, the United States and Mexico.  CP Rail has indicated that KCS has until Sept. 12 to accept its US$27.2 billion deal. In a letter to CN’s board on Tuesday, TCI Fund Management, CN’s second-largest investor is calling into question the management team in view of its lagging financial performance and unsuccessful pursuit of KCS.

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