CP Rail urges KCS to reconsider support for CN but refuses to increase takeover offer
Posted May 20, 2021 12:19:36 PM.
Last Updated May 20, 2021 12:27:13 PM.
Canadian Pacific Railway Ltd. has told Kansas City Southern that it won’t raise its takeover bid and urged the U.S. railway to reject rival CN Rail’s US$33.6-billion offer that it claims won’t be approved by the U.S. regulator.
In a letter ahead of its deadline to respond, CP Rail chief executive Keith Creel said the Calgary-based railway won’t “engage in a bidding war in reaction to CN’s illusory offer.”
He said several recent events, including the Department of Justice’s opposition and the Surface Transportation Board’s decision that stricter merger rules will be used to evaluate CN Rail’s voting trust, are enough for KCS to no longer consider CN’s bid to be superior.
Creel says there’s no longer any basis to terminate the CP-KCS merger agreement, which has already received STB approval to use a voting trust.
In a presentation to an investor conference, he acknowledged having “high level discussions” with a potential investor that could help the railway raise its offer.
While he wouldn’t categorically rule out teaming up with a financial partner, Creel says there’s no appetite to overpay.
Creel described CN rail as “an interloper” that’s willing to take on huge debt to deliver an offer that can’t be successful.
“Value not achievable is not value not believable,” he told the Bank of America Securities transportation, airlines and industrials conference.
“We’re not going to financially impair ourselves to create a company that isn’t able to invest in the network that needs to be invested in to realize its potential.”
This report by The Canadian Press was first published May 20, 2021.
Companies in this story: (TSX:CP, TSX:CNR)
The Canadian Press
