KSU Postpones Shareholder Vote on Acquisition by CNI to Sep 3


In a widely expected move, Kansas City Southern (KSU Quick QuoteKSU ) pushed back the special meeting of its shareholders by a fortnight. It was originally scheduled for Aug 19 and will now be held on Sep 3, 2021. At the meeting, shareholders of Kansas City Southern are scheduled to vote in favor or against Canadian National Railway’s (CNI Quick QuoteCNI ) $33.6-billion offer.

Kansas City Southern’s decision to postpone the meeting is the latest in the slew of updates pertaining to its takeover.

Let’s recap the series of interesting events leading to the meeting being rescheduled briefly.

The first update on this story that hitherto dominated the railroad space came in March when another railroad operator Canadian Pacific Railway Limited (CP Quick QuoteCP ) inked a $29-billion deal to buy the Kansas City, MO-based railroad operator. In April, Canadian National made a $33.6-billion offer to purchase the same. While its offer was accepted by Kansas City Southern in May, the proposal by Canadian Pacific was rejected.

Canadian Pacific returned with a revised offer worth $31 billion earlier this month, which was also turned down. While declining this enhanced offer, Kansas City Southern formally notified on Aug 12 that it continues to adhere to its May decision of accepting Canadian National’s bid, which includes instituting a voting trust.

The U.S. Surface Transportation Board (STB) is currently reviewing this proposal on the formation of a voting trust. The STB had earlier this month expressed its intent to take a call by Aug 31. Both Kansas City Southern and Canadian National expect a favorable regulatory decision regarding the voting trust.

As Kansas City Southern’s shareholders need to properly go through the STB verdict before voting, its management on Aug 12 announced that it will reschedule the meeting if the STB failed to pronounce its sentence by Aug 17. Its board members recommend its shareholders to vote in support of the impending transaction by Canadian National.

Watch this space for further updates on the topical issue in the railroad space.        

Zacks Rank & Key Pick

Kansas City Southern currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the Zacks  Transportation  sector is SkyWest  (SKYW Quick QuoteSKYW ) , currently sporting a Zacks Rank #1 (Strong Buy). You can see  the complete list of today’s Zacks #1Rank stocks here.

Shares of SkyWest have surged 31.9% over the past year.

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