Kansas City Southern agrees to merge with Canadian National

Kansas City Southern (KCS) reported that it will merge with Canadian National Railway in an approximately $ 30 billion deal.

Thus, the company’s decision was made after analyzing an inferior proposal by Canadian Pacific Railway.

The deal has an enterprise value of $ 33.6 billion.

This agreement also implies that Canadian National will assume a debt of 3.800 million dollars from Kansas City Southern.

For its part, Canadian Pacific responded that it could make a second offer to KCS.

KCS reported Friday that it entered into a Merger Agreement and Plan with the Canadian National Railway Company, a Canadian corporation, and Brooklyn Merger Sub, a Delaware corporation and a wholly owned subsidiary of Canadian National (Merger Sub).

In general, the Merger Agreement establishes, among other things, that subject to satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with Kansas City Southern (the “Merger”), and Kansas City Southern will survive the merger. Merger as a wholly owned subsidiary of Canadian National (the “Surviving Corporation”).

Kansas City Southern

The respective obligations of KCS and Canadian National to consummate the Merger are subject to the satisfaction or waiver of a number of customary conditions, including:

  • The adoption of the Merger Agreement by the shareholders of Kansas City Southern.
  • Canadian National Registration Statement on Form F-4 effective by Securities and Exchange Commission.
  • The absence of any court order or similar order that prohibits the consummation of the Merger or the Voting Trust Transaction.
  • Approval of the Voting Trust Transaction by the STB.
  • Approval by the Federal Economic Competition Commission (Cofece) and the Federal Telecommunications Institute (IFT) of the transactions contemplated in the Merger Agreement.
  • The Canadian National common shares that may be issued in the Merger have been approved for listing on the New York Stock Exchange and the Toronto Stock Exchange.
  • Accuracy of the representations and warranties of the other party, subject to certain materiality standards established in the Merger Agreement.
  • Compliance by the other party in all material aspects of the obligations of said other party under the Merger Agreement.