Kansas City Southern has terminated its plan to merge with CN.
In connection with KCS’ termination of the CN merger agreement, KCS will pay CN a USD $700 million cash company termination fee. It will also pay a USD $700 million cash CP termination fee refund provided for in the CN merger agreement.
CN does not need to pay any termination fees as a result of the termination of the CN merger agreement. The notice of termination from KCS follows the mutually agreed early termination of the match period provided for in the CN merger agreement.
CN officials say they still think the CN-KCS combination would have enhanced competition and delivered many other compelling benefits for stakeholders. However, they concede there have been significant changes to the U.S. regulatory landscape.
“While we are disappointed that we will not be able to deliver the many compelling benefits of this transaction to our stakeholders, the decision to bid for KCS was a bold and strategic move that still resulted in positive outcomes for CN,” JJ Ruest, president and CEO of CN, said in a news release.
“We believe that the decision not to pursue our proposed merger with KCS any further is the right decision for CN as responsible fiduciaries of our shareholders’ interests,” Ruest added. “CN will continue to pursue profitable growth and opportunities for excellence as a leading Class I railroad, and we look forward to outlining more details on our strategic, operational and financial priorities in the near future.”
CN said it launched its initial proposal which have made completing any Class I merger much less certain, including an executive order focused on competition issued by President Biden in July.