Rail operator Kansas City Southern (KCS) has decided to accept a revised takeover bid for Canadian Pacific (CP) rather than a higher offer from the Canadian National Railway Company (CN).
In a statement, KCS said in consultation with legal and financial advisors that CP’s $ 27.2 billion bid was superior to CN’s $ 29.6 billion proposal.
KCS has already notified CN of its intention to terminate the merger agreement with CN and conclude a new final agreement with CP.
However, CN has 5 business days to renegotiate and submit an improved proposal to obtain KCS.
In this transaction, the value of KCS is $ 300 per share, and each share of KCS common stock will be exchanged for 2.884 CP common stock and $ 90 in cash.
In addition, KCS Preferred Shareholders will receive $ 37.50 in cash for each KCS Preferred Stock held.
This transaction is subject to CP and KCS shareholder approval, regulatory approval, and other customary closing conditions.
Keith Creel, President and CEO of CP, said: “We are pleased to reach this important milestone and re-pursuit this once-in-a-lifetime partnership.
“As mentioned throughout this process, CP continues to work on everything that this opportunity brings. This merger proposal provides KCS shareholders with greater regulation and value certainty. This perfection. We are excited to move forward as we strive to achieve unity. ”
Reuters reports that CN will receive a $ 700 million split fee from KCS if it loses a merger with CP. You will also receive an additional $ 700 million paid to KCS to pass to CP to close the March transaction.