Kansas City Southern switches back to Canadian Pacific

The Kansas City Southern railroad said on Sunday that it had deemed an offer from Canadian Pacific superior to a bid from Canadian National, The New York Times reported Monday.

Canadian Pacific first put forward a roughly $29 billion bid for Kansas City Southern in March, before being topped by a $33.7 billion offer from its rival, Canadian National, in April.

In August, the Surface Transportation Board rejected a proposal for Canadian National to use a voting trust in the deal.

In a news release, Canadian Pacific noted the details of the deal.

“We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership,” said Keith Creel, CP president and CEO.

“As we have said throughout this process, CP remains committed to everything this opportunity presents. This merger proposal provides KCS stockholders greater regulatory and value certainty. We are excited to move forward as we work toward making this perfect match a reality.”

CP noted that under the terms of the CN-KCS merger agreement, CN has five business days to negotiate amendments to the CN-KCS merger agreement and the KCS board has that time to determine whether any such amendments would cause the CP agreement to no longer constitute a “Company Superior Proposal.”

But Canadian Pacific said, “A CP-KCS combination would create more competition — not less — in the freight rail industry and would be better for Amtrak. It brings more competition among railways and protects obligations to passenger service.”

Canadian Pacific said a CP-KCS combination:

▪ “Creates single-line routes to all the markets that a CN-KCS network would reach

▪ “Brings new competition to and from Upper Midwest markets dominated by BNSF or UP that CN-KCS cannot address

▪ “Creates new competition versus CN that CN-KCS combination actually eliminates

▪ “Has a route network that does not funnel all of its traffic through the congested Chicago area

▪ “Unlocks new capacity for Amtrak passenger service, rather than interfering with passenger service between Baton Rouge and New Orleans and south of Chicago.”


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