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CP Offer for KCS Declared “Company Superior Proposal” by KCS Board

[ September 17, 2021   //   ]

Canadian Pacific Railway Limited announced on September 12 that it has completed negotiations of a proposed merger agreement with Kansas City Southern, which the KCS Board of Directors has deemed a “Company Superior Proposal.”
CP stands 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.
“We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership,” said Keith Creel, CP President and CEO. “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.”
The 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.
KCS has notified CN that it intends to terminate KCS’s merger agreement with CN and enter into the definitive agreement with CP. Under the terms of the CN-KCS merger agreement, CN has five business days to negotiate amendments to the CN-KCS merger agreement and the KCS board has that time to determine whether any such amendments would cause the CP agreement to no longer constitute a “Company Superior Proposal.”

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