CN Continues to Duck Key Issues in Voting Trust Filing with STB
July 7, 2021
CN argument at close of public comment period fails to present convincing case that voting trust is in public interest
CALGARY, AB, July 7, 2021 /CNW/ – Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) today issued the following statement in response to Canadian National’s (“CN”) filing with the Surface Transportation Board (“STB”) replying to the many comments opposing CN’s proposed voting trust:
CN’s reply doubles down on arguments for a voting trust that CP has already shown do not meet the Board’s public interest test and sweeps under the rug the many public interest costs associated with CN’s proposed use of a trust.
CN continues to try to limit the STB’s discretion to determine what is in the public interest, repeating its flawed rhetoric about the Board’s “narrow test” and asserting that concerns raised by “rail labor, communities and passenger rail…are not relevant to this voting trust decision.” CN also repeats its false assertion that CN and CP are “identically situated” with respect to the relevant public interest factors, despite the fundamental differences in the public interest implications of their proposals that have already led the STB to subject the CN proposal to the 2001 merger rules and the elevated public test for voting trusts, pursuant to which approval shall be the “rare” exception rather than the routine.
CP looks forward to the Board’s decision on CN’s proposal, which will mark the next milestone in CP’s ability to present the CP/KCS alternative, which offers all the same benefits and more without any of the competitive and other costs of a CN acquisition of KCS.
CN’s reply falsely asserts that there is “no CP transaction” and that the Board would not “contrast” the CN transaction with a “hypothetical” CP/KCS transaction in any event. CN misses the point entirely: CP would not be asking the Board to “prefer” a CP/KCS transaction over a CN/KCS one, but merely revealing that the purported benefits CN is claiming for its own proposal should not be credited because they can be obtained in ways that do not harm the public interest. Through that lens, the CN/KCS deal should not be approved.
CP looks forward to offering KCS shareholders a realistic, achievable and ultimately superior path to realize the value of their stake in this proud company. On close inspection, CN’s bid remains truly illusory.
CP-KCS remains the only viable Class 1 combination
CP filed comments with the STB on June 28 outlining why the public interest costs of CN’s proposed voting trust outweigh the non-existent benefits. With the public comment period closed, STB’s subsequent deliberations will determine the course of competition for U.S. railroading and North American commerce for the next 150 years.
Importantly, the STB has already approved CP’s use of a voting trust and affirmed KCS’ waiver from the new rail merger rules it adopted in 2001 because a CP-KCS combination is truly end-to-end, pro-competitive, and the only viable Class 1 combination.
As previously announced, CP is continuing to pursue its application process to acquire KCS so that the pro-competitive CP-KCS combination can be reviewed by the STB and implemented without undue delay, in the event KCS’ agreement with CN is terminated or CN is otherwise unable to acquire control of KCS.
For more information on the benefits of a CP-KCS combination and the risks that a CN-KCS transaction would pose to the railway industry and North America, visit FutureForFreight.com.
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We caution that the foregoing list of factors is not exhaustive and is made as of the date hereof. Additional information about these and other assumptions, risks and uncertainties can be found in reports and filings by CP with Canadian and U.S. securities regulators. Reference should be made to “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements” in CP’s annual and interim reports on Form 10-K and 10-Q. Due to the interdependencies and correlation of these factors, as well as other factors, the impact of any one assumption, risk or uncertainty on FLI cannot be determined with certainty.
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ABOUT CANADIAN PACIFIC
Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. CP provides North American customers a competitive rail service with access to key markets in every corner of the globe. CP is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit http://www.cpr.ca to see the rail advantages of CP. CP-IR
SOURCE Canadian Pacific
Chris De Bruyn