by Josephine Cordero Sapién
13 Aug 2021
Following Canadian Pacific’s recent increased offer for Kansas City Southern prior to the KCS shareholders’ vote on the proposed CN-KCS combination, the Kansas City Southern Board of Directors has unanimously declared Canadian Pacific’s new offer not superior, advising its shareholders to vote in favour of the CN-KCS combination on 19 August.
Currently, the Surface Transportation Board (STB) has not yet ruled on whether to allow a voting trust as an acquisition mechanism, but issued a statement on 10 August that it would likely make its decision by 31 August. Both KCS and CN have said that should the STB decision not have been made by 6pm Central Time on 17 August, the shareholders’ meeting would be adjourned to give all shareholders and the board the ability to make a decision with the STB ruling in place. Canadian National and Kansas City Southern say they are confident that the voting trust would meet all the standards and public interest test and that it therefore should be approved.
KCS shareholders will be issued the merger consideration immediately following the closing of the voting trust, if approved. The voting trust is also subject to the shareholder approval and Mexican regulatory approvals.
Under the Canadian National offer, the total implied KCS value is 33.6 billion USD, including the assumption of 3.8 billion USD in KCS debt. KCS shareholders would receive 200 USD in cash and 1.129 shares of CN common stock for each KCS share.
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