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Kansas City Southern Receives Revised Proposal from Canadian Pacific That Board of Directors Determines is a "Company Superior Proposal"
Rhea-AI Impact
(Low)
Rhea-AI Sentiment
(Neutral)
Tags
management
Rhea-AI Summary
Kansas City Southern (KSU) announced that its Board of Directors has deemed Canadian Pacific's (CP) revised proposal a "Company Superior Proposal" compared to its current merger agreement with Canadian National Railway Company (CNI). The proposal includes exchanging each share of KSU common stock for 2.884 shares of CP and $90 in cash, with KSU preferred stockholders receiving $37.50 in cash. KSU plans to terminate its agreement with CNI and may accept CP's offer pending negotiation rights for CNI.
Positive
KSU's Board of Directors found CP's proposal superior, indicating potential for increased shareholder value.
The offer includes significant cash per share, which could enhance liquidity for KSU shareholders.
Negative
KSU will terminate its merger agreement with CNI, which may lead to uncertainties and potential strategy shifts.
The acceptance of CP's proposal is contingent upon CNI's right to negotiate, which could delay the decision.
KANSAS CITY, Mo.--(BUSINESS WIRE)--
Kansas City Southern (NYSE: KSU) (“KCS”) today announced that the KCS Board of Directors determined that CP’s revised proposal constitutes a “Company Superior Proposal” as defined in KCS’s merger agreement with Canadian National Railway Company (TSX: CNR, NYSE: CNI) (“CN”). The KCS Board of Directors made this determination after consultation with the Company’s outside legal and financial advisors.
Under the terms of CP’s proposal, each share of KCS common stock would be exchanged for 2.884 CP common shares and $90 in cash. In addition, holders of KCS preferred stock would receive $37.50 in cash for each share of KCS preferred stock held. The proposal is binding on CP and may be accepted by KCS at any time prior to 5:00 pm EDT on Monday, September 20, 2021. The transaction would be subject to approval by the stockholders of CP and KCS, receipt of regulatory approvals and other customary closing conditions.
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.”
BofA Securities and Morgan Stanley & Co. LLC are serving as financial advisors to Kansas City Southern. Wachtell, Lipton, Rosen & Katz, Baker & Miller PLLC, Davies Ward Phillips & Vineberg LLP, WilmerHale, and White & Case, S.C. are serving as legal counsel to Kansas City Southern.
About Kansas City Southern
Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS' North American rail holdings and strategic alliances with other North American rail partners are primary components of a unique railway system, linking the commercial and industrial centers of the U.S., Mexico and Canada. More information about KCS can be found at www.kcsouthern.com
What is Canadian Pacific's proposal for Kansas City Southern?
Canadian Pacific proposes to exchange each KSU common share for 2.884 CP common shares plus $90 in cash, with KSU preferred stockholders receiving $37.50 per share.
What does it mean that KSU's Board found CP's proposal a 'Company Superior Proposal'?
This determination suggests that the Board believes CP's offer provides greater value to shareholders compared to the current merger agreement with CNI.
What are the next steps for KSU following the proposal from Canadian Pacific?
KSU intends to terminate its merger agreement with CNI and may accept CP's proposal, subject to CNI’s negotiation rights.
How does this development affect the merger with Canadian National Railway Company?
KSU's acceptance of CP's proposal will terminate the merger agreement with CNI, leading to potential changes in strategic direction.
