Welcomes KCS Board of Directors' Determination
that CP's Offer Reasonably Expected to Lead to "Company Superior
Proposal"
CALGARY, AB, Sept. 4, 2021 /PRNewswire/ - Canadian
Pacific Railway Limited (TSX: CP) (NYSE: CP) ("CP") today said it
is ready to re-engage with the Kansas
City Board of Directors following its determination that
CP's revised offer can reasonably be expected to lead to a "Company
Superior Proposal."
"We look forward to re-engaging with the KCS Board of Directors
to advance this unique and achievable Class 1 combination that
provides compelling short- and long-term value," said Keith Creel, CP President and CEO. "CP-KCS is
the only truly end-to-end Class 1 merger that preserves and
enhances competition. It is the perfect combination and we are
ready to go to work to unlock this unique opportunity, creating
something special for the rail industry and for commerce in
North America."
CP this week reaffirmed its offer originally submitted
Aug. 10 and resubmitted Aug. 31 to combine with KCS, which recognizes the
premium value of KCS while providing regulatory certainty. CP
believes it ought to be deemed a superior proposal and has placed a
deadline of Sept. 12 on that
offer.
The proposed transaction values KCS at $300 per share, representing a 34%
premium1, based on the CP closing price on August 9, 2021 and KCS unaffected closing price
on March 19, 2021. Following the
closing into a voting trust, common shareholders of KCS will
receive 2.884 CP common shares and $90 in cash for each share of KCS common stock
held. The proposed transaction includes the assumption of
$3.8 billion of outstanding KCS
debt.
On Aug. 31, the Surface
Transportation Board ("STB") unanimously rejected CN and KCS's
joint motion for approval for use of a voting trust. That clearly
shows that the CN-KCS merger proposal is illusory and not
achievable.
Importantly, the STB has already approved CP's use of a voting
trust and affirmed CP-KCS's waiver from the new rail merger rules
it adopted in 2001 because a CP-KCS combination is truly
end-to-end, and pro-competitive.
CP-KCS: The only viable Class 1 combination
A CP-KCS
combination would create more competition – not less – in the
freight rail industry and would be better for Amtrak. It brings
more competition among railways and protects obligations to
passenger service.
A CP-KCS combination offers all the same benefits – and more –
to rail shippers and the supply chain with none of CN-KCS' harms or
need to enforce promises through regulation. A CP-KCS
combination:
- Creates single-line routes to all the markets that a CN-KCS
network would reach
- Brings new competition to and from Upper Midwest markets
dominated by BNSF or UP that CN-KCS cannot address
- Creates new competition versus CN that CN-KCS actually
eliminates
- Has a route network that does not funnel all of its traffic
through the congested Chicago
area
- Unlocks new capacity for Amtrak passenger service, rather than
interfering with passenger service between Baton Rouge and New
Orleans and south of Chicago
CP-KCS would enhance competition, create new and stronger
competitive single-line options against existing single-line routes
while taking trucks off the highway. CP-KCS would maintain all
existing freight rail gateways and maintain competition in the
Baton Rouge to New Orleans corridor, while creating new
north-south lanes between Western
Canada, the Upper Midwest and the Gulf Coast and
Mexico.
CP is willing to host intercity passenger rail service between
New Orleans and Baton Rouge, an outcome with far more
operational flexibility and less risk to Louisiana taxpayers. CP has consistently
received an A rating from Amtrak, leading the industry for the
previous five years-plus, in its annual host railroad report card
recognizing its industry-leading on-time performance record. CP is
also the first Class 1 railroad to complete 100 percent
certification of its Amtrak schedules.
A CP-KCS transaction would diminish the pressure for downstream
consolidation by preserving the basic six-railroad structure of the
North American rail network: two in the west, two in the east and
two in Canada, each with access to
the U.S. Gulf Coast. By contrast, a CN-KCS transaction would
fundamentally disrupt this balance.
For information on the benefits of a CP-KCS combination, visit
FutureForFreight.com.
FORWARD LOOKING STATEMENTS AND INFORMATION
This news
release includes certain forward-looking statements and forward
looking information (collectively, FLI). FLI is typically
identified by words such as "anticipate", "expect", "project",
"estimate", "forecast", "plan", "intend", "target", "believe",
"likely" and similar words suggesting future outcomes or statements
regarding an outlook. All statements other than statements of
historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its
nature, FLI involves a variety of assumptions, which are based
upon factors that may be difficult to predict and that may involve
known and unknown risks and uncertainties and other factors which
may cause actual results, levels of activity and achievements to
differ materially from those expressed or implied by these FLI,
including, but not limited to, the following: changes in business
strategies and strategic opportunities; estimated future dividends;
financial strength and flexibility; debt and equity market
conditions, including the ability to access capital markets on
favourable terms or at all; cost of debt and equity capital;
potential changes in the CP share price; the ability of management
of CP, its subsidiaries and affiliates to execute key priorities;
general North American and global social, economic, political,
credit and business conditions; risks associated with agricultural
production such as weather conditions and insect populations;
the availability and price of energy commodities; the effects
of competition and pricing pressures, including competition from
other rail carriers, trucking companies and maritime shippers in
Canada and the U.S.; North
American and global economic growth; industry capacity; shifts in
market demand; changes in commodity prices and commodity demand;
uncertainty surrounding timing and volumes of commodities being
shipped via CP; inflation; geopolitical instability; changes in
laws, regulations and government policies, including regulation of
rates; changes in taxes and tax rates; potential increases in
maintenance and operating costs; changes in fuel prices; disruption
in fuel supplies; uncertainties of investigations, proceedings or
other types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; sufficiency of CP's budgeted capital
expenditures in carrying out CP's business plan; services and
infrastructure; the satisfaction by third parties of their
obligations to CP; currency and interest rate fluctuations;
exchange rates; effects of changes in market conditions and
discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; the effects of current and future multinational
trade agreements on the level of trade among Canada and the U.S.; climate change and the
market and regulatory responses to climate change; anticipated
in-service dates; success of hedging activities; operational
performance and reliability; regulatory and legislative decisions
and actions; public opinion; various events that could disrupt
operations, including severe weather, such as droughts, floods,
avalanches and earthquakes, and cybersecurity attacks, as well as
security threats and governmental response to them, and
technological changes; acts of terrorism, war or other acts of
violence or crime or risk of such activities; insurance coverage
limitations; and the pandemic created by the outbreak of COVID-19
and resulting effects on CP's business, operating results, cash
flows and/or financial condition, as well as resulting effects on
economic conditions, the demand environment for logistics
requirements and energy prices, restrictions imposed by public
health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be
found in reports and filings by CP with Canadian and U.S.
securities regulators. Reference should be made to "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Statements" in CP's
annual and interim reports on Form 10-K and 10-Q. Due to the
interdependencies and correlation of these factors, as well as
other factors, the impact of any one assumption, risk or
uncertainty on FLI cannot be determined with certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
CP has
filed a definitive proxy statement with the Securities and Exchange
Commission ("SEC") to be used to solicit votes of the stockholders
of KCS against the proposal to adopt the Agreement and Plan of
Merger, dated as of May 21, 2021 (the
"CN Merger Agreement"), by and among CN, Brooklyn Merger Sub, Inc.,
a Delaware corporation and a
direct wholly owned subsidiary of CN, and KCS. Additionally,
in furtherance of CP's proposed transaction with KCS and subject to
future developments, CP (and, if a negotiated transaction is
agreed, KCS) may file one or more proxy statements, registration
statements, prospectuses or other documents with the SEC or
applicable securities regulators in Canada. This news release
is not a substitute for any proxy statement, registration
statement, prospectus or other document CP and/or KCS may file with
the SEC or applicable securities regulators in Canada in connection with the proposed
transaction.
INVESTORS AND STOCKOLDERS OF KCS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT, ALONG WITH ANY FUTURE PROXY
STATEMENT(S) AND OTHER PROXY MATERIALS, REGISTRATION STATEMENT(S),
PROSPECTUS(ES) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
OR APPLICABLE SECURITIES REGULATORS IN CANADA CAREFULLY IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KCS, CP, THE TRANSACTIONS CONTEMPLATED BY THE CN
MERGER AGREEMENT, CP'S PROPOSED TRANSACTION WITH KCS AND RELATED
MATTERS AND DEVELOPMENTS. THE DEFINITIVE PROXY STATEMENT
ALSO INCLUDES INFORMATION ABOUT THE IDENTITY OF THE PARTICIPANTS IN
CP'S PROXY SOLICITATION AND A DESCRIPTION OF THEIR DIRECT OR
INDIRECT INTERESTS THEREIN.
THE DEFINITIVE PROXY STATEMENT AND OTHER MATERIALS FILED WITH
THE SEC ARE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
WWW.SEC.GOV. IN ADDITION, INVESTORS AND STOCKHOLDERS MAY
OBTAIN FREE COPIES OF THE DEFINITIVE PROXY STATEMENT AND OTHER
MATERIALS FILED WITH THE SEC ONLINE AT INVESTOR.CPR.CA, OR UPON
REQUEST TO CP'S PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT (212)
750-5833 OR TOLL-FREE AT (877)
456-3442.
NO OFFER OR SOLICITATION
This news release shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to appropriate registration or qualification under
the securities laws of such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
ABOUT CANADIAN PACIFIC
Canadian Pacific
(TSX: CP) (NYSE: CP) is a transcontinental railway in
Canada and the United States with direct links to major
ports on the west and east coasts. CP provides North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit www.cpr.ca to see the
rail advantages of CP. CP-IR
__________________________
|
1 Based on KCS closing share price of
$224.16 as of March 19, 2021 and CP closing share price of
CAD$91.50 (at 1.2565 FX rate) as of August 9, 2021.
|
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content:https://www.prnewswire.com/news-releases/cp-looks-forward-to-re-engaging-with-kcs-to-form-cp-kcs-the-only-achievable-class-1-combination-301369469.html
SOURCE Canadian Pacific