Kansas City Southern reaffirms support for CN bid, but may delay vote

A CN locomotive makes it's way through the CN Taschereau yard in Montreal on November, 28, 2009. THE CANADIAN PRESS/Graham Hughes

Kansas City Southern says it will delay a shareholder vote on its deal to be bought by Canadian National Railway Co. that is set for Aug. 19 if a U.S. regulator does not release its decision on a key voting trust by Aug. 17.

The trust would allow KCS to remain independent while a full review of the transaction is conducted, but allow shareholders to be paid without having to wait for a final decision on the deal.

The U.S. Surface Transportation Board has said it will make a decision on whether to allow CN to use the trust by the end of August.

Read more: CP Rail hikes takeover bid for Kansas City Southern, new offer valued at US$31B

The KCS board also reaffirmed its support for the CN offer despite a sweetened bid by Canadian Pacific Railway Ltd. earlier this week.

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KCS says the CP Rail’s new offer, which is up from its bid earlier this year, did not constitute a “superior proposal” to the CN deal.

CP Rail’s offer valued at US$31 billion is less than CN’s proposal valued at US$33.6 billion, but CP Rail says its offer comes with less risk for shareholders because it is more likely to be approved by regulators.

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