ADM backs KCS-CP merger divestment plans

CHICAGO — ADM supports Canadian National’s (CN) request to divest the Kansas City Southern (KCS) rail line connecting Kansas City to Springfield, Mo., and East St. Louis, Illinois, as part of the proposed KCS merger with Canadian Pacific.

In a July 11 letter to the Surface Transportation Board, Christopher L. Boerm, president of ADM Transportation, said the company supports CN’s proposed divestiture that would create CN’s single-line service to and from of Kansas City that would directly compete with the service. provided by CP-KCS, if the merger is approved.

“While the new service is available, no options will be lost as KCS will retain access to lines ceded through a carriage agreement with CN,” Boerm said. “This new competitive option will be especially beneficial to customers and agricultural producers in the Midwest.”

CP agreed in September 2021 to acquire KCS in a stock and cash transaction valued at approximately $31 billion. The combined company would operate approximately 20,000 miles of track. The STB announced that it had accepted the merger application for review in November 2021. If approved by the STB, the transaction would create Canadian Pacific Kansas City Ltd. (CPKC), the only single-line railroad connecting the United States, Mexico and Canada.

CN had failed in its own bid to acquire KCS when the STB on August 31, 2021 unanimously rejected the use of a voting fiduciary agreement in the proposed transaction.

On February 28, 2022, CN formally requested the STB to “condition any approval of a merger between Canadian Pacific and Kansas City Southern on the divestiture of the KCS line from Kansas City, Mo., to Springfield and East St. Louis. , Illinois”. (Kansas City Speedway), to CN, pursuant to the STB’s statutory authority to order “surrender of parallel tracks” as a condition of amalgamation.

In its letter, ADM notes that if the divestiture condition is granted, CN has committed to investing $250 million in the line over three years to improve transit times, infrastructure and service. ADM’s grain handling and processing assets directly impacted by the KCS line divestiture would include Decatur and Cockrell, Illinois; and Mexico City, Missouri. In addition, ADM does business with several customers along the railway lines concerned.

“CN’s request to the Surface Transportation Board to grant its divestiture terms aligns with the customer-focused business approach CN has demonstrated since the beginning of our relationship,” Boerm said. “We hope the STB will also realize the customer-focused public interest benefits of CN’s divestiture condition and work closely with ADM, CN and all parties involved to promote regional competition and customer choice. .”

Final submissions from interested parties in the case are expected September 20, 2022. CP said it anticipates a decision by the STB on the proposed merger in the first quarter of 2023.