OTTAWA (dpa-AFX) - The Canadian National Railway or CN (CNI), on Wednesday, said Kansas City Southern (KSU), a Delaware-registered pure transportation holding company, has provided notice of termination of the definitive merger agreement inked with CN earlier this year, as the agreement fails to meet certain regulatory norms.
KCS will pay $700 million in cash to CN as 'company termination fee' as well as another $700 million in the form of 'CP termination fee refund' provided for in the CN merger deal. CN is also not obligated to pay any termination fees as a result of the termination of the CN merger agreement, the company said in a statement.
The notice of termination from KCS follows the mutually agreed early termination of the match period provided for in the CN merger agreement.
While CN continues to believe that a CN-KCS combination would have enhanced competition and delivered many other compelling benefits for stakeholders, there have been significant changes to the U.S. regulatory landscape since CN launched its initial proposal which have made completing any Class I merger much less certain, including an executive order focused on competition issued by President Biden in July.
'Given comments made by the STB in its decision on the joint CN-KCS voting trust application, CN firmly believes that no Class I merger with KCS should be approved without those public interest and enhanced competition commitments. CN will continue to actively participate in this important dialogue to ensure that all regulatory rules are enforced fairly, and customers do not suffer anti-competitive effects arising from a combination between Canadian Pacific and KCS,' said JJ Ruest, President and Chief Executive Officer of CN.
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