Changes in Canada National Railway Co
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UK hedge fund chief Chris Hohn has asked Canada National to give up $ 34bn in search of Kansas City Southern, with US railway officials denying the way the project was designed as it could destabilize public interest.
In a letter to the CN board reviewed by the Financial Times, TCI chief executive, one of the largest officials shareholders The Montreal Company, which has a net worth of $ 5bn of about 5%, also wants CN President Robert Pace and Jean-Jacques Ruest’s chief executive to step down.
The move to the next broker-dealer followed the US Surface Transportation Board’s suggestion that to deny CN’s request to set up a temporary voting prospect, with KCS participants being paid for the meeting before being received by the supervisor. CN shares rose nearly 7% at the end of trading on Tuesday.
CN and KCS may have decided to go ahead with the process without resorting to voting confidence, but the supervisor’s view should undermine the entire deal as the US company’s shareholders could re-establish another alliance with the anti-rail group in Canada Pacific.
CP had previously agreed to buy KCS, but was terminated later after the US company received a good deal from CN. CP offered a new opportunity to purchase KCS in early August as it was valued at $ 31bn, plus debt, as expected the STB refuses to use the voting trust in CN.
“CN must withdraw from this alliance with KCS,” Hohn told FT. “The CN Council should not continue without voting because it would be too profitable, costing billions of dollars to pay and could disrupt management at a time when the business is not doing well.
“CN has always been wrong about STB and the agency’s predictions have always been wrong. As a result [CN] The board is no longer trustworthy and the chairman and CEO have resigned, ”added Hohn.
CN and CP had no immediate comment on the matter.
TCI, which recently announced its political responsibility to CN, has named Jim Vena, a former CN member and enemy of the Union Union, as the company’s executive director.
TCI is the largest shareholder in CP, with a share of 8.4%. The fund manager of the hedge fund prefers a partnership between CP and KCS because integration among minority players in companies may have the potential to gain approval. The combination of KCS and CN would make it the third largest railway in North America.
The bitter war of the U.S. passenger industry confirms how important KCS is to all Canadian companies as it would allow the connection between what is happening from Canada to Mexico via the US at a time when cross-border trade is expected to grow significantly.
Under a $ 34bn deal, CN could be forced to pay a $ 1bn fine, but this could be lifted if both parties agree peacefully.