The new bid worth
“There’s not a meaningful gap if the deal’s not achievable," said CP Rail chief executive
“You can promise the sun the moon and the stars, but if you don’t have deal certainty ... if you can’t get the deal approved, how does the shareholder ever realize the value?”
CP Rail maintains that CN, whose larger network already stretches down to the
The CP Rail bid, Creel noted, will be evaluated under pre-2001 merger rules while the CN bid is being judged by more stringent rules that came into force that year. There hasn't been a takeover of a major railway since then so there's little precedent for how the new rules will play out.
CN is rail is still awaiting a decision by the railway regulator, which said Tuesday that it would have a ruling on the CN voting trust by
A recent executive order by
CN however maintains that it could increase competition by taking over KCS, and has committed to selling a roughly 113-kilometre stretch of rail where the two companies' networks run parallel.
The company said in a statement Tuesday that its offer remains the better one.
"CN and KCS' agreed transaction remains superior and the best option for both companies' stakeholders to deliver on a combination that will enhance competition and provide new servicing options for customers."
KCS shareholders will only have a few days to decide which offer is more compelling, as they have a vote scheduled on
On Friday, proxy advisory firm
The proxy firm also noted that as of last week, CP hadn't presented a worthy alternative.
"While CP is soliciting votes against the transaction, it has not provided KSU shareholders with any actionable alternative, let alone one that bridges the divide between its initial offer and (CN's) offer.”
Desjardins analyst
"Overall, our preliminary analysis gives us confidence that raising its offer would be doable for CP without jeopardizing its financial position," Poirier wrote.
"This would also solidify CP’s proposition to KCS's shareholders in a hostile environment for large-scale M&A in the industry following president Biden’s recent executive order on competition."
The KCS rail network runs from
CP Rail had signed a deal in March to buy KCS for about
Under CP Rail's new offer, KCS shareholders would receive 2.884 CP Rail shares and
The CN proposal would see KCS shareholders receive
This report by
Companies in this story: (TSX:CNR, TSX:CP)
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