Kansas City South supports $34 billion Canadian national offer

Southern Kansas City Southern supports Canadian National’s $34 billion offer, which is a blow to rival Canadian Pacific because of the rail operator’s bid. War heats up.

CN is willing to pay KCS shareholders US$200 in cash and 1.129 shares of its shares, From $200 in cash and 1.059 shares of CN common stock.

The total value of the transaction remains the same: KCS shareholders will still receive a compensation of $325 per share, but the rise in the convertible bond stock price reflects the decline in the Montreal-based railroad group’s share price.

KCS that has agreed to be acquired $29 billion spent by CP Including debt, the company will have to pay a fee of $700 million to break up the transaction.

The merger of the two companies will create the first railroad across Canada, the United States and Mexico. This route is expected to increase traffic when the North American economy recovers from the coronavirus pandemic.

KCS said in a statement: “After consulting with the company’s external legal and financial advisers, the KCS board determined that CN’s revised proposal constitutes a “corporate premium plan” as defined in the merger agreement between KCS and Canadian Pacific Railway.” KCS Said in a statement.

CP has five days to get a higher offer, which must at least bridge the 20% premium proposed by CN, which has become a fierce acquisition war.

CP stated that it still firmly believes that its offer will ultimately win because it claims that the merger with CN will face major regulatory challenges.

CP said in a statement: “It is not surprising that CN made the offer. It only highlights CN’s recognition of the significant regulatory risks/challenges associated with anti-competitive bidding.”

It added: “The Ground Transportation Commission has approved CP to use the voting rights trust for its competitive merger with KCS.”

Since CSX and Norfolk Southern acquired Conrail in 1999 and split it up, the competition for the smallest group of seven Tier 1 railway groups serving the North American freight market has been the boldest attempt to consolidate the industry.

This transaction is in US-Mexico-Canada Trade Agreement It replaced the North American Free Trade Agreement and further raised the hope of a boom in cross-border business activities.

Since CN participated in KCS performances, CN has been on a charm offensive. He took out advertisements and created a website called Connected Continent to attract support for his bid.

Robert Pace, Chairman of the CN Board of Directors, said on Thursday: “For KCS, we are a better bid, a better partner, a better railway and the best solution. We are very pleased that the KCS Board of Directors recognizes our proposal. Superiority.”