MONTREAL – The Canadian National Railway Company renounces its purchase of Kansas City Southern, ending its battle for the acquisition of the American railway.
The move comes after KCS ruled that a competing offer from Canadian Pacific Railway was a better proposition than its deal with CN.
CN suffered a setback last month when the U.S. Surface Transportation Board denied the company’s use of a voting trust, saying it would be bad for the competition.
The trust would have allowed KCS shareholders to be paid before the US regulator completed its review of the proposed buyout.
The CP, which is smaller and has a more limited presence in the United States, has already gained approval for a voting trust.
Under its deal with KCS, CN says the U.S. Railroad will pay a termination fee of US $ 700 million as well as US $ 700 million that CN paid when KCS broke its original agreement with CP to accept CN’s offer.
Companies in this story: (TSX: CNR, TSX: CP)
The Canadian Press