A Sale and a Partnership Derailed

Dec 8, 2003

One company is high on ambition. The other is deep in distress. The owners of Mexico’s top railroad now are feuding over deal gone bad involving a choice asset.

All was on track in August for Kansas City Southern Railroad to take control of Mexico’s most important railroad. Mike Haverty, chairman, president and chief executive officer of Kansas City, had struck a deal to buy out his company’s ailing Mexican partner, Grupo Transportación Marítima Mexicana (TMM), and take over a cross-border railroad that has become a critical artery linking the US and Mexico.

TMM, struggling with excessive debt, operating losses and impatient bondholders, agreed in April to sell its 43% stake in the railroad, Transportación Ferroviaria Mexicana (TFM), to Kansas City. The US company already owned 37% of TFM, and TMM’s board promptly gave the sale its blessing. By August, the deal only required the formality of winning shareholder approval. It seemed that Haverty, who got his start in the business working as a brakeman on a Kansas line 40 years ago, was about to walk off with the...

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