Canadian National says still committed to buying US railroad

A man walks into Central Station next to Canadian National headquarters in Montreal, Tuesday, Nov. 26, 2019. Canadian National sweetened its offer to buy Kansas City Southern railroad Thursday, May 13, 2021, and derailed rival Canadian Pacific’s bid for the railroad that handles traffic in the United States and Mexico. (Graham Hughes/The Canadian Press via AP)

OMAHA, Neb. (AP) — Canadian National railroad is indicating it remains committed to its $33.6 billion acquisition of Kansas City Southern, despite reservations from one major shareholder and a regulatory setback.

CN CEO JJ Ruest on Wednesday underscored what he sees as the potential benefits of the deal and he believes most of his shareholders support it. He said he is also confident that regulators will eventually approve CN's acquisition of Kansas City Southern, which would be the first major railroad merger in more than 20 years.

“Leave no doubt, CN is very committed to this transaction,” Ruest said at an investor conference.

Canadian National has the edge in the bidding for Kansas City Southern over a rival $25 billion offer from Canadian Pacific. CP has until the end of Thursday to respond after Kansas City Southern's board declared last week it prefers CN's offer.

On Tuesday, shareholder with a nearly 3% stake in Canadian National sent a letter urging CN's board to abandon the deal because of uncertainty about whether U.S. regulators would approve the acquisition. But the shareholder, the London-based investment firm TCI Fund, is also the largest shareholder in Canadian Pacific, so it has a potential conflict of interest.

Canadian National's biggest shareholder, Bill Gates' Cascade Investment, has come out publicly in support of the deal.

Ruest said he’s confident the deal will succeed because it could offer $1 billion in cost and revenue improvements and it would better serve the needs of customers looking to take advantage of growing trade between the United States, Canada and Mexico.

Canadian Pacific has said allowing Canadian National and Kansas City Southern to combine would hurt competition.

The Surface Transportation Board has said it will review any deal involving major railroads carefully to determine if it would enhance competition and serve the public interest. Earlier this week, the board initially refused to approve Canadian National’s plan to set up a voting trust that would acquire Kansas City Southern and own the railroad while regulators review the deal. The board said it didn't have a copy of the detailed merger agreement.