Canadian Pacific Railway Ltd on Thursday reiterated its commitment to buy Kansas City Southern and asked the U.S. railroad operator to reject rival Canadian National Railway’s takeover offer.
Kansas City last week accepted Canadian National’s $33.6 billion bid, upending a prior $29 billion deal with Canadian Pacific, which has until the end of Thursday to raise its offer.
The U.S. Surface Transportation Board (STB) on Monday denied Canadian National’s motion for approval of voting trust agreement, while the U.S. Department of Justice last week said the company’s bid for Kansas City appears to pose greater risks to competition.
The STB had earlier this month approved the voting trust for Canadian Pacific’s proposed acquisition of Kansas City.
Canadian National said it was preparing a renewed motion for the STB to approve its proposed voting trust to be filed on or before May 21.
“We respectfully believe there is no longer any basis to terminate the CP-KCS Merger Agreement,” said Canadian Pacific in a letter to Kansas City Southern’s Board.
“The best way for the KCS Board to fulfill its fiduciary duties in light of recent developments would be to continue to pursue the CP-KCS combination, which already has the benefit of STB approval to use a voting trust,” the letter read.
Billionaire hedge fund manager Chris Hohn on Tuesday urged Canadian National to abandon its bid unless the Canadian railroad operator changed its agreement to drop the key voting trust feature that could invite more regulatory scrutiny.