UK Hedge Fund Manager, Chris HonAnd she demanded that Canadian National (CN) Drop your $ 34 billion mission from a US railroad competitor Kansas City Southern (KCS).
Hohn’s Hedge Fund, Turks and Caicos IslandsCNN, the fifth-largest shareholder with a 3 per cent stake worth $ 2.3 billion, asked the company headquartered in Montreal Giving up a major advantage in a takeover offer or withdrawing from a deal on the spot.
Turks and Caicos Islands Does not agree with the plan CN To create a vote confidence, through which the shareholders KCS Before the transaction gets full approval from Surface Transfer Board (STB, For its English acronym), major railroad regulator.
Voting funds are mechanisms that allow the buyer of an asset to pay promptly to a target company’s shareholder, while the organizers investigate a proposed merger. During this process, companies seeking to merge continue to operate independently.
In March, his rival Canadian Pacific (CP) It agreed to pay $ 29 billion in cash and shares to buy it KCS, In an agreement that also included the use of vote confidence. Turks and Caicos Islands It is also the largest shareholder in CP, With an 8.4 per cent stake, worth $ 4.3 billion, according to Standard & Poor’s Capital IQ.
last week, CN It provided $ 34 billion in cash and equity, according to a board of directors KCS, Was superior to the current agreement with CP. I informed the American company CP That he had until Friday to improve his show or he would cancel this deal in favor of Show CN.
On Monday, the regulator indicated it will take a tougher stance on ballot boxes as implemented CNHe added that the use of the aforementioned structure is a “privilege, not a right” and referred to that CN s KCS They will face a “heavier burden” to prove that their synthesis is in the public interest.
“The STB It sends a clear signal and board CN You have a duty to listen. He said the risk of not agreeing to the vote is too great to ignore. here In a message.
he added: “CN Already has an enormous rail network in North America; no need KCS To thrive. It is time to put an end to this unwise adventure. “
Two Canadian railroad groups are coveting KCS Because it would give either of them the ability to link their operations from Canada to Mexico via the United States at a time when cross-border trade is expected to increase dramatically.
Mix with CP It will consolidate the number of operators, but the combined company will remain the smallest by revenue out of the remaining six major operators. On the contrary, the combination CN It will create the third largest rail operator.
Turks and Caicos Islands The current proposal he proposed is opposed CN To create a voting confidence, where you may have to sell KCS At a loss if regulatory bodies prevent the merger. What’s more, CN It will lose C $ 2 billion in resolution fees if the deal fails to win regulatory approval.
here He indicated in his message: “If they decide to ignore this recommendation and sign a merger agreement in its current form, but the vote confidence does not receive approval and leads to a loss of CAD 2 billion, then we will wait for the resignation of the Executive Director.”
The US Department of Justice Notice earlier this month that the ‘proposed acquisition of KCS by CN It appears to pose greater competition risks than merger CP-KCS“.
Select the antitrust regulator to combine CN s KCS It can lead to eliminating competition on the different roads operated by both railways.