Kansas City Southern’s Board Says Canadian National’s Unsolicited Proposal Could be a ‘Company Superior Proposal’

(Photo courtesy Kansas City Southern)

Kansas City Southern’s Board of Directors unanimously determined that Canadian National Railway’s unsolicited proposal could reasonably be expected to lead to a “Company Superior Proposal” as defined in KCS’s merger agreement with Canadian Pacific Railway.

The board reached the conclusion following consultation with the company’s outside legal and financial advisors.

On March 21, 2021, KCS announced that it had entered into a merger agreement with Canadian Pacific Railway, a move the railroads said would create the first Canada-to-Mexico rail network. Under the agreement, CP agreed to acquire KCS in a stock and cash transaction valued at $29 billion, or $275 per KCS share, based on the CP and KCS closing prices on March 19.

Canadian National Railway subsequently submitted an unsolicited proposal to acquire Kansas City Southern in a cash and stock transaction valued by CN at $33.7 billion, or $325 per KCS share.

“KCS intends to provide CN with nonpublic information and to engage in discussions and negotiations with CN with respect to CN’s proposal, subject in each case to the requirements of the CP merger agreement,” the railroad said in a news release.

“KCS remains bound by the terms of the CP merger agreement, and KCS’s Board has not determined that CN’s proposal in fact constitutes a Company Superior Proposal as defined in the merger agreement with CP,” the railroad added. “In addition, KCS notes that there can be no assurance that the discussions with CN will result in a transaction.”

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