Canadian Pacific (CP) and Kansas City Southern (KCS) shareholders will have an opportunity to vote on the CP-KCS combination next month.
On Dec. 8, CP shareholders will vote on the issuance of CP common shares to KCS stockholders in connection with the proposed merger. “All shareholders of record of CP common stock as of the close of business on Nov. 1, 2021 will be entitled to vote their shares,” CP said.
At the Dec. 10 KCS meeting, “[a]ll stockholders of record of KCS common stock and KCS 4% non-cumulative preferred stock as of the close of business on Oct. 14, 2021, will be entitled to vote their shares” on the merger, said KCS, noting that the railroad’s Board of Directors “unanimously recommends that stockholders vote ‘FOR’ the merger agreement with CP.”
CP and KCS in September agreed to combine in a stock and cash transaction representing an enterprise value of approximately $31 billion, which includes the assumption of $3.8 billion of outstanding KCS debt.
“The transaction, which has the unanimous support of both Boards of Directors, values KCS at $300 per share, representing a 34% premium, based on the CP closing price on Aug. 9, 2021, the date prior to which CP submitted a revised offer to acquire KCS, and KCS’ unaffected closing price on March 19, 2021,” CP reported.
On Sept. 30, the Surface Transportation Board (STB) confirmed that it approved the use of a voting trust for the transaction. “The conditions to closing into voting trust include receipt of approval from the shareholders of both companies along with the satisfaction of other customary closing conditions, including receipt of Mexican regulatory approvals,” CP said.
“We are pleased to ask our shareholders to support this unique, once-in-a-lifetime partnership to create the first U.S.-Mexico-Canada rail network,” CP President and CEO Keith Creel said. “This end-to-end combination is an extraordinary opportunity to inject new competition and capacity into the U.S. rail network and unlock new environmentally friendly transportation options that will grow the USMCA economy.”
On Oct. 29, CP and KCS jointly filed a railroad control application with the STB to merge and create Canadian Pacific Kansas City (CPKC). On Nov. 1, STB released a procedural schedule for the proposed transaction, inviting public comment.