Canadian National (CN) has announced that it has submitted to the Surface Transportation Board (“STB”) a prefiling notification of its intent to file an application seeking authority to combine with Kansas City Southern (“KCS”) further to CN’s superior proposal for a cash-and-stock transaction valued at $33.7bn, or $325 per share.
The Notice of Intent (the “Notice”) sets out CN’s commitment to proceeding under the STB’s current merger rules and assuring the STB and customers that CN will maintain seamless service and enhanced competition after combining the two end-to-end networks. The Notice also confirms that CN intends to seek approval of the voting trust in the coming days. STB approval of the voting trust would enable KCS shareholders to receive full payment of consideration under CN’s $325 per share proposal without having to await final STB approval of the transaction. CN’s plain vanilla voting trust is identical to the one already approved by KCS’ board of directors in its previously announced transaction, and CN believes that they are both equally likely to be approved by the STB.
Together, according to CN, CN and KCS would offer multiple interchanges and create greater choice and service options for customers of both companies. Customers will benefit from a faster, more direct and more efficient network of end-to-end single-line services from Mexico to the United States to Canada, with an enhanced ability to connect ports in the Atlantic, Pacific, and the Gulf of Mexico. The combined company would add more fluid, rapid and cost-efficient options across network points for customers such as Laredo, Texas; Detroit, Michigan; and Southern Ontario, Canada.
This rail and logistics network is also stated to reduce traffic congestion and prevent thousands of tonnes of greenhouse gas emissions from entering the atmosphere every day.
“Our proposal to KCS is simple. We are providing greater and more certain value, and a clear path to closing. We have a better bid. We are a better railroad. We will be a better partner for KCS and the communities it serves. And we believe the STB and our customers will recognize that CN presents the best solution for the continued growth, development and prosperity of the North American economy,” said Jean-Jacques Ruest, CEO of CN. “CN has made a superior proposal and is committed to satisfying the current STB merger rules. CN is confident that the STB will approve the voting trust, which will permit KCS shareholders to crystallize the value of its US and Mexico franchise, and then permit the STB to undertake the careful review process it should take following the closing into the voting trust.”
Source: Canadian National
