-=Kansas City Southern (KSU): Canadian National (CNI) makes a superior proposal of $325/share

 Kansas City Southern: Canadian National (CNI) announced that it has made a superior proposal to combine with Kansas City Southern (KSU) in a cash-and-stock transaction valued at $33.7 billion, or $325/share

Under the terms of the superior proposal made today to KCS' Board of Directors, following closing into a voting trust, KCS shareholders will receive $200 in cash and 1.059 shares of CN common stock for each KCS common share. Based on yesterday's closing price of CN shares, CN's proposal is valued at $325 per KCS share. This represents an implied premium of 45% when compared to KCS' unaffected closing stock price on March 19, 2021 and an 21% improvement over the current value of KCS' agreement with Canadian Pacific Railway (CP). With greater than two-times more cash consideration, CN's superior proposal delivers greater value and certainty to KCS shareholders, as well as participation in the significant upside of the combined company.

CN currently estimates that the combination would result in EBITDA synergies approaching $1 billion annually, with the vast majority of synergies coming from additional revenue opportunities. CN anticipates the transaction to be accretive to CN's adjusted diluted earnings per share in the first full year following CN assuming control of KCS. These are conservative estimates based on publicly available information and would be refined during the due diligence process.

-=Kansas City Southern (KSU) to be acquired by Canadian Pacific (CP)

 

Kansas City Southern to be acquired by Canadian Pacific (CP) in stock and cash transaction representing an enterprise value of $29 bln

Canadian Pacific Railway (CP) and Kansas City Southern (KSU) announced they have entered into a merger agreement, under which CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29 billion, which includes the assumption of $3.8 billion of outstanding KCS debt. The transaction, which has the unanimous support of both boards of directors, values KCS at $275 per share, representing a 23% premium, based on the CP and KCS closing prices on March 19, 2021.

The combined network's new single-line offerings will deliver dramatically expanded market reach for customers served by CP and KCS, provide new competitive transportation service options, and support North American economic growth. The transaction is also expected to create jobs across the combined network. Additionally, efficiency and service improvements are expected to achieve meaningful environmental benefits.

While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

Canadian Pacific Railway Limited's (TSX: CP) (NYSE: CP) Board of Directors and President and Chief Executive Officer Keith Creel have agreed on contract amendments to Mr. Creel's incentive compensation that are intended to see him lead the Company until at least early 2026.