Canadian National Railway Co. says it is evaluating its options after a U.S. regulator rejected its use of a key trust agreement in its plan to buy Kansas City Southern Railway.
The Montreal-based railway says it is disappointed by the U.S. Surface Transportation Board’s decision, but that it remains confident its offer to buy the U.S. railway is in the public interest.
The trust would have allowed KCS to remain independent while a full and lengthy regulatory review of the proposed takeover went forward, while also allowing shareholders to be paid without having to wait for a final decision on the deal.
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However, the U.S. regulator said that while the trust would mean CN wasn’t in direct control of KCS operations, it would still be a beneficial owner and share in profits.
CN’s proposed acquisition would be the first takeover of a major U.S. railway in two decades and the first to test stricter criteria that looks at whether a merger would enhance competition.
Canadian Pacific Railway, which has approval for a voting trust structure, has also made an offer to acquire the U.S. railway.
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