CN Receives Notice of Termination of KCS Merger Agreement
September 15 2021 - 8:35AM
CN (TSX: CNR, NYSE: CNI) announced today that Kansas City Southern
(NYSE: KSU) (“KCS”) has provided notice of termination of the
previously announced May 21, 2021 definitive merger agreement with
CN (“CN merger agreement”).
In connection with KCS’ termination of the CN
merger agreement, KCS will pay CN the USD$700 million cash “Company
Termination Fee” as well as the USD$700 million cash “CP
Termination Fee Refund” provided for in the CN merger agreement. CN
is also not obligated 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. While CN continues to believe that a
CN-KCS combination would have enhanced competition and delivered
many other compelling benefits for stakeholders, there have been
significant changes to the U.S. regulatory landscape since CN
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.
“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. 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. 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.”
- JJ Ruest, President and Chief
Executive Officer of CN
CN appreciates the broad array of stakeholders
who wrote more than 1,750 letters of support for participating in
this important engagement process with the Surface Transportation
Board (“STB”). Throughout the proposed merger process with KCS, CN
made numerous unprecedented pro-competitive commitments to provide
all market participants, railroads and customers with enhanced
route choices, pricing transparency and a fair chance to
compete. Given comments made by the STB in its decision
on the joint CN-KCS voting trust application, CN firmly believes
that no Class I merger with KCS should be approved without those
public interest and enhanced competition commitments. CN will
continue to actively participate in this important dialogue to
ensure that all regulatory rules are enforced fairly, and customers
do not suffer anti-competitive effects arising from a combination
between Canadian Pacific and KCS.
About CN
CN is a world-class transportation leader and
trade-enabler. Essential to the economy, to the customers, and to
the communities it serves, CN safely transports more than 300
million tons of natural resources, manufactured products, and
finished goods throughout North America every year. As the only
railroad connecting Canada’s Eastern and Western coasts with the
U.S. South through a 19,500-mile rail network, CN, and its
affiliates have been contributing to community prosperity and
sustainable trade since 1919. CN is committed to programs
supporting social responsibility and environmental stewardship.
Forward-Looking Statements
Certain statements included in this news release
constitute “forward-looking statements” within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
under Canadian securities laws, including statements based on
management’s assessment and assumptions and publicly available
information with respect to CN. By their nature, forward-looking
statements involve risks, uncertainties and assumptions. CN
cautions that its assumptions may not materialize and that current
economic conditions render such assumptions, although reasonable at
the time they were made, subject to greater uncertainty.
Forward-looking statements may be identified by the use of
terminology such as “believes,” “expects,” “anticipates,”
“assumes,” “outlook,” “plans,” “targets,” or other similar
words.
Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other
factors which may cause actual results, performance or achievements
of CN to be materially different from the outlook or any future
results, performance or achievements implied by such statements.
Accordingly, readers are advised not to place undue reliance on
forward-looking statements. Important risk factors that could
affect the forward-looking statements in this news release include,
but are not limited to: the duration and effects of the COVID-19
pandemic, general economic and business conditions, particularly in
the context of the COVID-19 pandemic; industry competition;
inflation, currency and interest rate fluctuations; changes in fuel
prices; legislative and/or regulatory developments; compliance with
environmental laws and regulations; actions by regulators;
increases in maintenance and operating costs; security threats;
reliance on technology and related cybersecurity risk; trade
restrictions or other changes to international trade arrangements;
transportation of hazardous materials; various events which could
disrupt operations, including illegal blockades of rail networks,
and natural events such as severe weather, droughts, fires, floods
and earthquakes; climate change; labor negotiations and
disruptions; environmental claims; uncertainties of investigations,
proceedings or other types of claims and litigation; risks and
liabilities arising from derailments; timing and completion of
capital programs; and other risks detailed from time to time in
reports filed by CN with securities regulators in Canada and the
United States. Reference should also be made to Management’s
Discussion and Analysis in CN’s annual and interim reports, Annual
Information Form and Form 40-F, filed with Canadian and U.S.
securities regulators and available on CN’s website, for a
description of major risk factors relating to CN.
Forward-looking statements reflect information
as of the date on which they are made. CN assumes no obligation to
update or revise forward-looking statements to reflect future
events, changes in circumstances, or changes in beliefs, unless
required by applicable securities laws. In the event CN does update
any forward-looking statement, no inference should be made that CN
will make additional updates with respect to that statement,
related matters, or any other forward-looking statement.
Contacts:
MediaCanadaMathieu GaudreaultCN
Media Relations & Public Affairs(514)
249-4735Mathieu.Gaudreault@cn.ca Longview Communications &
Public AffairsMartin Cej (403) 512-5730
mcej@longviewcomms.caUnited StatesBrunswick
GroupJonathan Doorley / Rebecca Kral(917) 459-0419 / (917)
818-9002jdoorley@brunswickgroup.comrkral@brunswickgroup.com |
Investment
CommunityPaul ButcherVice-PresidentInvestor Relations(514)
399-0052investor.relations@cn.ca |
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