CN makes new attempt to impact KCS-CP merger

The long-running dispute over the acquisition of Kansas City Southern (KCS) continues to drag on even though the US operator has already closed a deal with Canadian Pacific (CP). 

The CP-KCS deal would create the first US-Mexico-Canada rail network.

Canadian National (CN) - who made a higher offer to acquire KCS but failed to obtain regulatory approval from the Surface Transportation Board (STB) - submitted a notice of intent on Wednesday to STB, asking it to condition any approval of the CP-KCS merger on the divestiture of some KCS lines to CN. 

KCS announced the completion of its sale to CP on December 14.

In a statement issued on Thursday, CN said it was requesting STB to condition approval of the proposed merger on the divestiture of KCS lines from Kansas City, Missouri to Springfield and East St. Louis, Illinois (the Springfield Line) to CN, in line with STB’s statutory authority to order “the divestiture of parallel tracks” as a merger condition.

According to CN, CP already has a route from Kansas City to Chicago and beyond to Detroit and Eastern Canada, running parallel to the KCS line. 

CN also pledged to invest US$250mn in the Springfield Line. 

In response, KCS and CP released a joint statement. 

“KCS's Kansas City-Springfield line is not "parallel" to CP's line between Kansas City and Chicago. KCS's line does not reach Chicago, and contrary to CN's misleading statements, KCS's line is not part of a through route to Chicago in conjunction with CN,” the companies said. 

“In fact, there is no direct connection between KCS and CN today at Springfield,” they added. 

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