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STB Advances CN-KCS Voting Trust Review
June 09, 2021
STB Advances CN-KCS Voting Trust Review Written by Marybeth Luczak, Executive Editor
The Surface Transportation Board (STB) has directed proposed merger partners CN and Kansas City Southern (KCS) to submit by June 14 certain financial documents, which will inform public comments on their voting trust agreement.
In its June 8 filing setting the voting trust review schedule (download below), STB said comments are due June 28, and the deadline for CN and KCS to respond is July 6. A final STB decision could come by mid-July, at the earliest.
The STB noted that its request for CN-KCS financial documents debt commitment letters plus company disclosure schedules and capital allocation policies, among others is part of a “more cautious approach to proposed voting trusts” following the adoption of new major merger rules in 2001.
As soon as the STB issued its decision granting Kansas City Southern a waiver from prevailing merger rules established about 20 years ago, KCS following the terms of its existing merger agreement with Canadian Pacific said it would now consider CN’s counter-offer.
KCS reported April 24 that its Board of Directors has determined that the unsolicited merger proposal it received from CN on April 20 might end up “superior” to the KCS-Canadian Pacific (CP) merger agreement announced March 21. KCS now intends to engage in discussions with CN. Both CP and CN have responded, each with language used before, reiterating points that have been expressed several times within the past week.
CP: ‘Bullish’ on 2021
CP: ‘Bullish’ on 2021 Written by Marybeth Luczak, Executive Editor
CP’s operating ratio, which included a $33 million expense related to the Kansas City Southern (KCS) acquisition, came in at 60.2% for the first three months of 2021. This is a 100 basis-point increase from 59.2% in the prior-year period. Adjusted, the first-quarter 2021 OR improved 70 basis points to 58.5%.
“The strong demand environment, particularly across bulk, merchandise and domestic intermodal, coupled with our commitment to the foundations of Precision Scheduled Railroading enabled our success in the first quarter,” Canadian Pacific (CP) President and CEO Keith Creel reported during the merger-bound railroad’s earnings announcement.
January 14, 2021
Cowen 4Q20 Surveys: Rail Pricing, Car Orders Up Slightly, Say Shippers Written by Marybeth Luczak, Executive Editor
The Cowen and Company analysts reported that Kansas City Southern “again” received the highest “positive” rating, followed by BNSF in their 4Q Rail Shipper Survey.
Rail shippers in fourth-quarter 2020 expected price increases of 3.2% (up 10bps sequentially), and their sub-group of railcar buyers raised order expectations modestly, according to two surveys conducted by Cowen and Company analysts Jason H. Seidl (Managing Director and Railway Age Wall Street Contributing Editor), Matt Elkott and Elliot Alper.
Following are the analysts’ key takeaways from the Rail Shipper Survey and Rail Equipment Survey.