Kansas City Southern (NYSE: KSU) (“KCS”) today announced that
the Company’s Board of Directors, in consultation with its
financial and legal advisors, has unanimously determined that the
acquisition proposal KCS received from Canadian Pacific Railway
Limited (TSX: CP, NYSE: CP) (“CP”) on September 12, 2021 continues
to constitute a “Company Superior Proposal” under KCS’s pending
merger agreement with Canadian National Railway Company (TSX: CNR,
NYSE: CNI) (“CN”). KCS also announced that it entered into a waiver
letter agreement today with CN under which CN agreed to waive the
five-business day match period under the CN merger agreement and
KCS agreed to terminate the CN merger agreement today.
Following the KCS Board’s determination and the execution of the
waiver letter, KCS terminated the CN merger agreement and is
entering into a merger agreement with CP. Under the terms of the CP
merger agreement, upon closing of CP’s voting trust, each share of
KCS common stock will be exchanged for $90 in cash and 2.884 shares
of CP common stock. In addition, holders of KCS preferred stock
will receive $37.50 in cash for each share of KCS preferred stock
held. Closing will be subject to approval by the stockholders of CP
and KCS, receipt of regulatory approvals and other customary
closing conditions.
In connection with the termination of the CN merger agreement,
KCS is paying CN a breakup fee of $700 million and will also pay CN
an additional $700 million in return of the $700 million previously
paid by CN to KCS to reimburse the termination fee paid to CP in
May. Both of these payments will be reimbursed to KCS by CP. KCS
will be obligated to refund CP’s reimbursement under certain
limited circumstances, including if KCS terminates the CP merger
agreement to accept a superior proposal. In light of the
termination of the CN merger agreement, KCS has cancelled the
previously announced Special Meeting of Stockholders for KCS
stockholders on September 24, 2021 to vote on the CN merger
agreement. KCS will schedule a new Special Meeting of Stockholders
for KCS stockholders to vote on the CP merger agreement in due
course.
KCS and CP will be jointly issuing a separate press release with
respect to the KCS-CP transaction.
BofA Securities and Morgan Stanley & Co. LLC are serving as
financial advisors to Kansas City Southern. Wachtell, Lipton, Rosen
& Katz, Baker & Miller PLLC, Davies Ward Phillips &
Vineberg LLP, WilmerHale, and White & Case, S.C. are serving as
legal counsel to Kansas City Southern.
About Kansas City Southern
Headquartered in Kansas City, Mo., Kansas City Southern (KCS)
(NYSE: KSU) is a transportation holding company that has railroad
investments in the U.S., Mexico and Panama. Its primary U.S.
holding is The Kansas City Southern Railway Company, serving the
central and south central U.S. Its international holdings include
Kansas City Southern de Mexico, S.A. de C.V., serving northeastern
and central Mexico and the port cities of Lázaro Cárdenas, Tampico
and Veracruz, and a 50 percent interest in Panama Canal Railway
Company, providing ocean-to-ocean freight and passenger service
along the Panama Canal. KCS' North American rail holdings and
strategic alliances with other North American rail partners are
primary components of a unique railway system, linking the
commercial and industrial centers of the U.S., Mexico and Canada.
More information about KCS can be found at www.kcsouthern.com.
Forward-Looking Statements And Information
This press release includes certain forward looking statements
and forward looking information (collectively, “FLI”) to provide
Kansas City Southern and Canadian Pacific shareholders and
potential investors with information about Kansas City Southern,
Canadian Pacific and their respective subsidiaries and affiliates,
including each company’s management’s respective assessment of
Kansas City Southern, Canadian Pacific and their respective
subsidiaries’ future plans and operations, which FLI may not be
appropriate for other purposes. 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. In particular, this press release contains FLI
pertaining to, but not limited to, information with respect to the
following: the transaction; the combined company’s scale; financial
growth; future business prospects and performance; future
shareholder returns; cash flows and enhanced margins; synergies;
leadership and governance structure; and office and headquarter
locations.
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: the timing and completion of the
transaction, including receipt of regulatory and shareholder
approvals and the satisfaction of other conditions precedent;
interloper risk; the realization of anticipated benefits and
synergies of the transaction and the timing thereof; the success of
integration plans; the focus of management time and attention on
the transaction and other disruptions arising from the transaction;
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 Canadian Pacific share
price which may negatively impact the value of consideration
offered to Kansas City Southern shareholders; the ability of
management of Canadian Pacific, its subsidiaries and affiliates to
execute key priorities, including those in connection with the
transaction; general Canadian, U.S., Mexican 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, the U.S. and México; industry
capacity; shifts in market demand; changes in commodity prices;
uncertainty surrounding timing and volumes of commodities being
shipped; 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; 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, the U.S. and
México; climate change and the market and regulatory responses to
climate change; anticipated in-service dates; success of hedging
activities; operational performance and reliability; customer,
shareholder, regulatory and other stakeholder approvals and
support; regulatory and legislative decisions and actions; the
adverse impact of any termination or revocation by the Méxican
government of Kansas City Southern de México, S.A. de C.V.’s
Concession; 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; material adverse changes in economic and industry
conditions, including the availability of short and long-term
financing; and the pandemic created by the outbreak of COVID-19 and
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 Kansas City Southern and Canadian Pacific
with Canadian and U.S. securities regulators, including any proxy
statement, prospectus, material change report, management
information circular or registration statement to be filed in
connection with the transaction. 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 press
release is expressly qualified in its entirety by these cautionary
statements.
Additional Information About The Transaction And Where To
Find It
Canadian Pacific will file with the U.S. Securities and Exchange
Commission (the “SEC”) a registration statement on Form F-4, which
will include a proxy statement of Kansas City Southern that also
constitutes a prospectus of Canadian Pacific, and any other
documents in connection with the transaction. The definitive proxy
statement/prospectus will be sent to the shareholders of Kansas
City Southern. Canadian Pacific will also file a management proxy
circular in connection with the transaction with applicable
securities regulators in Canada and the management proxy circular
will be sent to Canadian Pacific shareholders. INVESTORS AND
SHAREHOLDERS OF KANSAS CITY SOUTHERN AND CANADIAN PACIFIC ARE URGED
TO READ THE PROXY STATEMENT/PROSPECTUS AND MANAGEMENT PROXY
CIRCULAR, AS APPLICABLE, AND ANY OTHER DOCUMENTS FILED OR TO BE
FILED WITH THE SEC OR APPLICABLE SECURITIES REGULATORS IN CANADA IN
CONNECTION WITH THE TRANSACTION WHEN THEY BECOME AVAILABLE, AS THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT KANSAS CITY SOUTHERN,
CANADIAN PACIFIC, THE TRANSACTION AND RELATED MATTERS. The
registration statement and proxy statement/prospectus and other
documents filed by Canadian Pacific and Kansas City Southern with
the SEC, when filed, will be available free of charge at the SEC’s
website at www.sec.gov. In addition, investors and shareholders
will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC by
Kansas City Southern online at www.investors.kcsouthern.com, upon
written request delivered to Kansas City Southern at 427 West 12th
Street, Kansas City, Missouri 64105, Attention: Corporate
Secretary, or by calling Kansas City Southern’s Corporate
Secretary’s Office by telephone at 1-888-800-3690 or by email at
corpsec@kcsouthern.com, and will be able to obtain free copies of
the registration statement, proxy statement/prospectus, management
proxy circular and other documents which will be filed with the SEC
and applicable securities regulators in Canada by Canadian Pacific
online at investor.cpr.ca and www.sedar.com, upon written request
delivered to Canadian Pacific at 7550 Ogden Dale Road S.E.,
Calgary, Alberta, T2C 4X9, Attention: Office of the Corporate
Secretary, or by calling Canadian Pacific at 1-403-319-7000.
You may also read and copy any reports, statements and other
information filed by Kansas City Southern and Canadian Pacific with
the SEC at the SEC public reference room at 100 F Street N.E., Room
1580, Washington, D.C. 20549. Please call the SEC at 1-800-732-0330
or visit the SEC’s website for further information on its public
reference room. This communication 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.
Participants In The Solicitation Of Proxies
This communication is not a solicitation of proxies in
connection with the transaction. However, under SEC rules, Kansas
City Southern, Canadian Pacific, and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies in connection with the transaction.
Information about Kansas City Southern’s directors and executive
officers may be found on its website at www.kcsouthern.com and in
its 2020 Annual Report on Form 10-K filed with the SEC on January
29, 2021, available at www.investors.kcsouthern.com and
www.sec.gov. Information about Canadian Pacific’s directors and
executive officers may be found in its 2021 Management Proxy
Circular, dated March 10, 2021, as well as its 2020 Annual Report
on Form 10-K filed with the SEC and applicable securities
regulators in Canada on February 18, 2021, available on its website
at investor.cpr.ca and at www.sedar.com and www.sec.gov. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the interests of such
potential participants in the solicitation of proxies in connection
with the transaction will be included in the proxy
statement/prospectus and management proxy circular and other
relevant materials filed with the SEC and applicable securities
regulators in Canada when they become available.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210915005665/en/
Media C. Doniele Carlson KCS
Corporate Communications & Community Affairs (816) 983-1372
dcarlson@kcsouthern.com
Joele Frank, Wilkinson Brimmer Katcher Tim Lynch / Ed Trissel
(212) 355-4449
Investment Community Ashley
Thorne Vice President Investor Relations (816) 983-1530
athorne@kcsouthern.com
MacKenzie Partners, Inc. Dan Burch / Laurie Connell (212)
929-5748 / (212) 378-7071 dburch@mackenziepartners.com
lconnell@mackenziepartners.com
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