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Back to Their Future: CP and KCS
KCS declares Canadian Pacific’s merger offer as ‘superior’
CP edges closer to Kansas City Southern merger
Stop and Read the Documents
CANADIAN Pacific (CP) says it is ready to re-engage with the Kansas City Southern’s (KCS) Board of Directors following the decision that CP’s revised offer for KCS can reasonably be expected to lead to a ‘Company Superior Proposal’.
“We look forward to re-engaging with the KCS Board of Directors to advance this unique and achievable Class 1 combination that provides compelling short- and long-term value,” says Mr Keith Creel, CP president and CEO. “CP-KCS is the only truly end-to-end Class 1 merger that preserves and enhances competition. It is the perfect combination, and we are ready to go to work to unlock this unique opportunity, creating something special for the rail industry and for commerce in North America.”
The Surface Transportation Board (STB) rejected the planned merger between Canadian National and KCS on August 31, at which point CP resubmitted an offer for KCS that it had originally made on August 10. It has placed a deadline of September 12 for that offer.
The proposed transaction values KCS at $US 300 per share, representing a 34% premium based on the CP closing price on August 9, and KCS unaffected closing price on March 19.
Following the closing into a voting trust, common shareholders of KCS will receive 2.884 CP common shares and $US 90 in cash for each share of KCS common stock held. The proposed transaction includes the assumption of $US 3.8bn of outstanding KCS debt.
CP claims its merger with KCS would bring new competition to and from Upper Midwest markets currently dominated by BNSF or Union Pacific that it claims it cannot address, create a network that doesn’t funnel all of its trains through the congested Chicago area and also unlocks capacity for Amtrak passenger trains instead of interfering with passenger trains south of Chicago and between Baton Rouge and New Orleans.
This article first appeared on www.railjournal.com
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