Kansas City Southern To Merge with Canadian Pacific

The squabble over the merger with Kansas City Southern continues as KCS declares Canadian Pacific’s offer as the superior proposal over the original Canadian Nationals merger.

Canadian Pacific Railway announced in a press release that the company has completed negotiations of a proposed merger agreement with Kansas City Southern which the KCS Board of Directors has deemed a "Company Superior Proposal."

Previously, Canadian Pacific Railway Limited submitted a “superior” proposal to acquire Kansas City Southern (KCS) in a stock and cash transaction valued at approximately US$31 billion, offering KCS stockholders an alternative that recognized the premium value of KCS while providing more regulatory certainty. However, at that time KCS announced that after a careful and thorough review in consultation with outside financial and legal advisors, the company has determined that the unsolicited proposal received from Canadian Pacific did not constitute a “Company Superior Proposal” and could not reasonably be expected to lead to a “Company Superior Proposal”.

Nevertheless, after careful renegotiations between KCS and CP, KCS has notified CN that it intends to terminate KCS’s merger agreement with CN and enter into the definitive agreement with CP, subject to CN’s right to negotiate amendments to the merger agreement for at least five business days and the KCS Board’s further determination as to whether any such amendments would cause the CP proposal no longer to constitute a “Company Superior Proposal.”

"We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership. As we have said throughout this process, CP remains committed to everything this opportunity presents. This merger proposal provides KCS stockholders greater regulatory and value certainty. We are excited to move forward as we work toward making this perfect match a reality.” Said Keith Creel, CP President and CEO.

AS previously reported by MBN, KCS and CP’s merger consists of KCS’s shares being value at US$300 each, representing a 34 percent premium, based on the CP closing price on August 9, 2021, and KCS unaffected closing price from March 19, 2021. In addition, common shareholders of KCS will receive 2,884 CP common shares and US$90 in cash for each share of KCS common stock held. The proposed transaction also includes the assumption of US$3.8 billion of outstanding KCS debt.