Kansas City Southern said on Sunday that it plans to accept Canadian Pacific Railway Ltd’s $27.2 billion cash-and-stocks takeover offer, a $29.6 billion deal to sell itself to Canadian National Railway Ltd. is better than.
The Canadian National now has time to submit a better offer or lose its deal with Kansas City Southern by the end of Friday. At stake is the construction of the first direct railway linking Canada, the United States and Mexico.
Kansas City Southern’s change of heart came when the US Surface Transportation Board (STB) last month rejected a temporary “voting trust” structure that allowed Kansas City Southern shareholders to receive a $325-per-share cash-and-stock idea. would be allowed to do. Make a deal with Canadian National without waiting for full regulatory approval.
Canadian Pacific has approved its proposed voting trust by the STB. According to people familiar with the deliberations, regulatory certainty convinced the board of Kansas City Southern to switch to a deal with Canadian Pacific, even though its offering was lower than Canadian National’s.
Kansas City has a silver lining for Southern. Canadian Pacific now plans to accept this, which is priced at $300 per share in cash and stock, better than the $275 per share cash-and-stock deal that both companies did in March, earlier. That Canadian National gatecrashed it and entered one. Agreement with Kansas City Southern in May.
Were Canadian National to lose to Canadian Pacific, it would receive a $700 million break-up fee from Kansas City Southern and be reimbursed a further $700 million, which would have awarded Kansas City Southern the break-up fee to Canadian Pacific. As was paid to pass. Ending their March deal. Canadian Pacific has said it will cover $1.4 billion in costs that will be indebted to Kansas City Southern Canadian National.
Canadian National has also faced pressure from some of its investors, including hedge fund TCI Management Ltd., which has abandoned its pursuit of Kansas City Southern.
Canadian National did not immediately respond to a request for comment on its next steps.
The STB said last month that even though the overlap of Canadian National and Kansas City Southern’s networks was limited to 70 miles (113 km) between Baton Rouge and New Orleans, both railways operated parallel lines in the central part of the United States. And could have been under less pressure to compete if the voting trust was approved for that deal. It said it is not making a final determination on whether the competing issues facing the deal can be resolved under full regulatory review.
US President Joe Biden has issued sweeping executive orders aimed at boosting competition in the US economy. An order encouraged STBs to consider Amtrak’s statutory rights when assessing whether a rail merger was in the public interest.
US government-owned passenger railroad Amtrak opposed the Canadian National’s Voting Trust, saying its pledge to split the Baton Rouge into the New Orleans line would harm future passenger service in Louisiana.
This News Originally From – The Epoch Times