It wasn’t a knockout punch, but federal regulators’ rejection of an important component of the Canadian National Railway’s bid to buy the Kansas City Southern Railway might signal good news for suburbs opposing the merger.
The U.S. Surface Transportation Board on Monday nixed CN’s request to create a “voting trust” that would hold KCS’s stock until the merger is decided on by STB members.
“The board finds that the proposed use of a voting trust … would not be consistent with the public interest” and “would give rise to potential public interest harms relating to both competition and divestiture,” members wrote in a ruling announced Tuesday.
A number of municipalities from Bartlett to Barrington urged the STB to deny the plan, fearing a merger would add to freight train traffic and delays that surged when the board in 2008 approved CN’s purchase of the smaller EJ & E Railroad, which runs through multiple north, west, and south suburbs.
Also weighing in was the Canadian Pacific Railway, initially embraced by Kansas City Southern as a merger partner this spring, only to be dumped when CN moved in.
“The STB decision clearly shows that the CN-KCS merger proposal is illusory and not achievable,” Canadian Pacific President Keith Creel said in a statement. To Kansas City Southern’s board, he wrote, “CP has always maintained that the CN-KCS combination and the proposed CN voting trust is not in the public interest,” Creel said. “Hundreds of rail shippers, community leaders, elected officials and other stakeholders have voiced those same concerns and today the STB agreed.”
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