With the Canadian National Railway (CN) bid’s withdrawn, the Canadian Pacific Railway (CP) and the Kansas City Southern Lines (KCS) have jointly announced today (9-15-21) that they have entered into a merger agreement. Under the terms, the CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately USD$31 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 $300 per share, representing a 34 percent premium based on the CP closing price on August 9, 2021 — the date prior to which CP submitted a revised offer to acquire KCS — and KCS’ unaffected closing price on March 19, 2021.
In speaking about the merger, CP President and Chief Executive Officer Keith Creel said, “Our path to this historic agreement only reinforces our conviction in this once-in-a-lifetime partnership. We are excited to get to work bringing these two railroads together. By combining, we will unlock the full potential of our networks and our people while providing industry-best service for our customers. This perfect end-to-end combination creates the first U.S.-Mexico-Canada rail network with new single-line offerings that will deliver dramatically expanded market reach for CP and KCS customers, provide new competitive transportation options, and support North American economic growth.”
KCS President and Chief Executive Officer Patrick J. Ottensmeyer said, “We are glad to be partnering with CP to create a railroad that is able to compete by providing the best value for the transportation dollar. The CP-KCS combination will not only benefit customers, labor partners, and shareholders through new, single-line transportation services, attractive synergies, and complementary routes, it will also benefit KCS and our employees by enabling us to become part of a growing and truly North American continental enterprise.”
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Canadian Pacific and Kansas City Southern Execute Agreement to Combine, Creating First Single-Line Rail Network Linking U.S.-Mexico-Canada