CALGARY — Canadian Pacific Railway Ltd. says it is appealing to the U.S. regulator that governs railway mergers to dispute a claim by Canadian National Railway Co. that its rival bid for Kansas City Southern will be assessed in the same way as CP’s bid.
On Tuesday, Montreal-based CN announced a cash-and-stock bid valued at US$33.7 billion for Kansas City-based KCS, topping one made last month by Calgary-based CP Rail valued at US$25 billion.
CP says CN’s bid, if successful, would be “contrary to the public interest” because of negative effects on competition that don’t exist with the CP bid.
A CN-KCS combination would be the third-largest Class 1 railroad in North America, while a CP-KCS merger would create the smallest of the six remaining railroads by revenue.
CP has asked the U.S. Surface Transportation Board to rule that its combination with KCS qualifies under a waiver the regulator granted to KCS in 2001 from more stringent merger rules adopted to protect competition.
It says the STB should make it clear that CN’s bid will not qualify for the same exemption.
“Because of the far more serious public interest concerns posed by CN’s proposed acquisition of KCS, CN’s suggestion that its proposal should be subject to the same regulatory treatment as the CP/KCS transaction is incorrect,” CP said in a news release.
“Whereas a Canadian Pacific transaction raises none of the issues that motivated the new merger rules in 2001, the CN proposal raises all of them, especially competitive and downstream consolidation concerns.”
This report by The Canadian Press was first published April 21, 2021.
Companies in this story: (TSX:CP, TSX:CNR)
The Canadian Press