A UK hedge fund is demanding the Canadian National Railways (CN) to review its $ 33.6 billion ($ 1 billion) bid for Kansas City Southern (KSU).
The two companies agreed late on Thursday to build a railway linking Mexico, the United States and Canada. The American company had just passed out of the deal, which it obtained from its Canadian competitor Pacific (CP) last March.
Management of TCI Fund, the fifth-largest shareholder of CN, asked them to rethink one of the main measures of this agreement, namely, the creation of a vote confidence agreement.
Thanks to that, Kansas City Southern shareholders can be paid even before the Surface Transportation Board approves the merger. The two companies will continue to be managed separately.
If the US regulator rejects the merger, CN may be forced to sell Kansas City Sgeouthern at a loss and lose $ 2 billion in fines, which worries fund manager Chris Hoon. He said in a letter that the risk would be greater than such a scenario would occur.
To (re) read: Acquisition of Southern Kansas City: A “slight” setback for the CN
The Surface Transportation Board put the brakes on the process on Monday, while it was time to determine whether the CN bid was in the public interest, as the bid did not include a detailed merger agreement.
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