CN and Kansas City Southern have entered into a definitive merger agreement.
Under the terms of the agreement, which was unanimously approved by the Board of Directors of each company, KCS shareholders will receive $325 per common share based on CN’s May 13, 2021 offer, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt.
KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6 percent of the combined company. This represents an implied premium of 45 percent when compared to KCS’ unaffected closing stock price on March 19, 2021.
KCS’ preferred shareholders will receive $37.50 in cash for each preferred share.
“We are thrilled that KCS has agreed to combine with CN to create the premier railway for the 21st century,” JJ Ruest, president and chief executive officer of CN, said in a news release.
“I would like to thank the numerous stakeholders of both companies who have demonstrated overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them,” Ruest added. “I am confident that together with KCS’ experienced and talented team, we will meaningfully connect the continent – enhancing competition, offering more choice for customers, and driving environmental stewardship and shareholder value.”