Ruest, Ottensmeyer: Voting Trust “Meets the Public Interest Test”

At independent investment management firm Bernstein’s 37th Annual Strategic Decisions Conference, in prepared remarks and a “fireside chat,” Ruest and Ottensmeyer “articulated how the combination of CN and KCS will create a fully end-to-end merger that will deliver significant public interest benefits for customers, ports, employees, communities and the environment,” the railroads said in a joint statement. 

“The economy in North America, especially now post-COVID, really needs a network of the kind that we are talking about putting together especially as it relates to USMCA (United States-Mexico-Canada Agreement),” said Ruest. “There is something in it for shareholders. There is something in it for customers. There is something in it for employees—this is a growth project; it will create jobs. There is something in it for the port operators that connect to us. It will give them better access to more cities, more importers, more exporters, so they too can do what they do best.” 

“This combination will create a truly end-to-end network that will provide a new single-line service to go after the I-35 freight corridor and the market opportunity that exists there,” said Ottensmeyer. “I think this will clearly be of interest to a lot of shippers as demonstrated by the support we have seen already, as well as create new competitive options that simply don’t exist today. We are combining two important segments that are already recognized as premium service segments, and this network is going to be unparalleled in terms of the access to markets, ports and the way we can participate in and help drive some of the economic growth we think will exist in the years ahead.” 

CN and KCS said Ruest and Ottensmeyer “made a compelling case for voting trust approval as the STB reviews [their] joint request under the current merger rules. the joint motion for approval makes very clear that CN has shown there will be no unlawful, premature control of KCS; that KCS and CN are financially sound throughout and after the trust period; and that a voting trust is in the public interest.”

The combination of CN and KCS, with CN’s commitment to divest KCS’s 70-mile New Orleans-Baton Rouge line, will, the two CEO said:

• “Create an end-to-end merger with significant options for customers in the North-South corridor, [with] no risk to competition. In fact, customers will now be able to access new markets that were not previously available to them via efficient single-line service. Customers will continue to have multiple options to move goods along this corridor, including the availability to use an improved new CN-KCS route, five other Class I railroad routings, the Mississippi River and two major interstate highways. Customers will not lose any existing routing options because CN and KCS are committed to preserving access to all existing gateways to enhance route choices and to ensure robust price competition.  

• “Eliminate delays associated with interchanges and facilitate coordinated investment into new single-line routes. This will in turn reduce cycle and transit times, provide more reliable and timely service, and reduce costs.

• “Offer more cost-effective access to Southern markets in the United States and Mexico, accelerating USMCA’s economic benefits. That’s in addition to delivering compelling benefits for six major shipper market segments and significant environmental benefits by removing trucks from the road.”

Ruest and Ottensmeyer noted that the proposed merger “has received broad-based support from across the CN and KCS stakeholder network, with more than 1,400 letters filed with the STB to date.”

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