The Calgary-based railway has previously rejected suggestions that it needs to increase its bid to fend off its larger, Montreal-based rival. But that may be the path it needs to follow to regain the upper hand by having what’s considered the superior proposal.
Alternatively, industry analysts suggest CP Rail could pocket the US$700 million break fee paid by CN Rail to KCS for terminating the CP purchase agreement.
Or it could hold tight and wait for a ruling from the U.S. railway regulator, the Surface Transportation Board, on CN’s voting trust of KCS shares.
Kansas City Southern informed CP Rail Thursday evening that it was terminating their purchase agreement after CN presented a revised US$33.6-billion offer that increased the number of its shares available to KCS shareholders and agreed to cover the break fee.
CP Rail responded to the move by criticizing CN’s offer and suggesting it will make a decision by May 21, the imposed deadline.
“There is nothing new here; this doesn’t make it any more likely that the CN proposal can close into a voting trust,” it said in a news release.