The US Surface Transportation Board (STB) on Tuesday rejected a voting trust proposed by Canadian National Railway for its $29 billion deal to buy US railroad operator Kansas City Southern.
The rail regulator’s ruling is a blow to Canadian National, which is locked in a takeover battle for Kansas City with smaller rival Canadian Pacific.
“The Board finds that the proposed use of a voting trust in the context of the impending control application does not meet the standards under the current merger regulations,” the regulator said in a statement.
Canadian Pacific’s voting trust was approved by the STB when the company had initially struck a $25 billion deal in March, only to be trumped later by Canadian National.
Canadian Pacific is also vying for Kansas City Southern and was initially approved by the US Surface Transportation Board. Bloomberg via Getty ImagesCP then improved its offer to $27 billion this month, hoping antitrust concerns will give it an edge over its larger rival, but Kansas City rejected the new bid though the offer remains on the table.
A voting trust would insulate the acquisition target from the acquirer’s control until the STB clears the deal on a permanent basis.
