Kansas City Southern to hold CN-KCS merger vote in September

“KCS and CN are confident that the voting trust meets all the standards and the public interest test set forth by the STB and believe that it should be approved,” KCS said Thursday. “KCS stockholders will receive the merger consideration immediately upon the closing of the voting trust, which is also subject to receipt of KCS stockholder approval and Mexican regulatory approvals.”

Rivals CN and Canadian Pacific are both seeking to acquire KCS. CP and KCS announced in March their plans to merge, but then CN put forth a competing bid and KCS opted in May to go with CN’s bid instead.

According to KCS, the CN-KCS merger agreement calls for CN to acquire KCS in a stock-and-cash transaction valued at $325 per common share, based on CN’s May 13, 2021, offer, implying a total enterprise value of $33.6 billion. This would also include the assumption of approximately $3.8 billion of KCS debt. Under the terms of the agreement with CN, KCS stockholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share.

CP (NYSE: CP) offered a revised bid to acquire KCS last week, which KCS subsequently dismissed. But CP said it is still interested in acquiring KCS should the merger fall through.

CP last week presented KCS with a stock-and-cash bid worth an estimated $31 billion. The proposal valued KCS at $300 per share. 

“By rightly postponing Thursday’s meeting, the KCS Board of Directors appropriately will allow stockholders to have access to all the information needed before voting on the CN-KCS merger proposal,” including the STB’s decision on CN’s proposed voting trust, CP said Thursday in response to KCS’ decision.

“Delaying the stockholder vote also means KCS stockholders won’t become locked into a CN-KCS combination and then unable to consider other, better options like CP’s Aug. 10 proposal, which remains outstanding,” CP said.

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Related links:

• KCS declines Canadian Pacific’s revised, $31B takeover offer

• Canadian Pacific submits revised offer to acquire Kansas City Southern

• Drilling Deep: Saia, ODFL and KC Southern on Mehrotra’s mind

For full coverage of the CN/CP/KCS situation, click here.