Kansas City Southern Determines CP's Revised Bid Superior To CN Offer

(RTTNews) - Kansas City Southern (KSU) or KCS said Sunday it determined that Canadian Pacific Railway Limited's (CP, CP.TO) revised proposal constitutes a "Company Superior Proposal" as defined in KCS's merger agreement with Canadian National Railway Company (CNI, CNR.TO) or "CN".

As per 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 on September 20, 2021.

Kansas City Southern said it 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."

In a separate press release, CP said it is ready to execute a definitive merger agreement to create the first U.S.-Mexico-Canada railway to enhance competition in the North American rail network.

CP noted that its merger proposal values KCS at $300 per share, representing a 34% premium, based on the CP closing price on August 9, 2021 and KCS unaffected closing price on March 19, 2021.

Following the closing into a voting trust, common shareholders of KCS will receive 2.884 CP common shares and $90 in cash for each share of KCS common stock held. The proposed transaction includes the assumption of $3.8 billion of outstanding KCS debt.