It’s official: CN and Kansas City Southern announced that they have entered into a definitive merger agreement.
Under the terms of the agreement, which was unanimously approved by the Board of Directors of each company, KCS shareholders will receive $325 per common share based on CN’s May 13 offer, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6 per cent of the combined company.
This represents an implied premium of 45 per cent when compared to KCS’ unaffected closing stock price on March 19. KCS’ preferred shareholders will receive $37.50 in cash for each preferred share.
“We are thrilled that KCS has agreed to combine with CN to create the premier railway for the 21st century. I would like to thank the numerous stakeholders of both companies who have demonstrated overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them.” said JJ Ruest, president and chief executive officer of CN.
“As North America’s most customer-focused transportation provider, we are excited about this combination with CN, which will provide customers access to new single-line transportation services at the best value for their transportation dollar, and increase competition among the Class 1 railroads. As a larger continental enterprise with complementary routes and an enhanced platform for revenue growth, capital investment, and job creation, we will be positioned to deliver on the transaction’s powerful synergies which will create new growth opportunities for our customers, employees, labor partners, communities and shareholders.” said Patrick J. Ottensmeyer, president and chief executive officer of KCS.
The combination of CN and KCS will hope to further accelerate CN’s growth profile by connecting North America’s industrial corridor to create new options for shippers and new revenue for the combined company. A CN-KCS combination aims to help realize the many benefits of the USMCA.
Print this page
