Kansas City Southern Receives Revised Proposal from Canadian National Railway That Board of Directors Determines is a "Company Superior Proposal"

Rhea-AI Summary

Kansas City Southern (NYSE: KSU) has received a revised acquisition proposal from Canadian National Railway Company (TSX: CNR, NYSE: CNI). The proposal offers $200 in cash and 1.129 shares of CN stock for each KCS share. The KCS board regards this as a 'Company Superior Proposal' compared to its existing agreement with Canadian Pacific Railway Limited (TSX: CP, NYSE: CP). KCS plans to terminate its merger with CP, pending any amendments proposed by CP. The transaction requires stockholder approval and other regulatory clearances.

Positive

• Revised proposal from CN offers substantial cash and stock value.
• KCS board identifies CN's proposal as a 'Company Superior Proposal', indicating potential for greater shareholder value.

Negative

• KCS to terminate merger agreement with CP, which may disrupt existing plans.
• Dependence on regulatory approvals may delay the transaction.

Kansas City Southern (NYSE: KSU) (“KCS”) today announced receipt of a revised acquisition proposal from Canadian National Railway Company (TSX: CNR, NYSE: CNI) (“CN”). Under the terms of CN’s revised proposal, each share of KCS common stock would be exchanged for $200 in cash and 1.129 shares of CN common stock. The proposal is binding on CN and may be accepted by KCS at any time prior to 5:00 pm EDT on Friday, May 21, 2021. The transaction would be subject to approval by the stockholders of KCS, approval by the Surface Transportation Board of a voting trust, receipt of other regulatory approvals and other customary closing conditions.

After consultation with the Company’s outside legal and financial advisors, the KCS board of directors determined that CN’s revised proposal constitutes a “Company Superior Proposal” as defined in KCS’s merger agreement with Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (“CP”).

KCS has notified CP that it intends to terminate KCS’s merger agreement with CP and enter into the definitive agreement with CN, subject to CP’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 CN 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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210513006080/en/

FAQ

What is the revised acquisition proposal for Kansas City Southern (KSU)?

The revised proposal from Canadian National Railway offers $200 in cash and 1.129 shares of CN for each share of KCS.

What does the KCS board think about the CN proposal?

The KCS board has determined that CN's revised proposal qualifies as a 'Company Superior Proposal' compared to its agreement with CP.

What happens to KCS's merger with Canadian Pacific (CP) due to the CN proposal?

KCS intends to terminate its merger agreement with CP and pursue the CN proposal, subject to CP's right to negotiate amendments.

What approvals are needed for the CN acquisition proposal to proceed?

The transaction requires approval from KCS stockholders, regulatory approvals, and clearance from the Surface Transportation Board.