KCS Stockholders to Vote on Merger Proposal

Kansas City Southern (KCS) stockholders will vote on the railroad’s proposed combination with CN on Aug. 19.

CN and KCS announced the special online meeting of stockholders on July 8. Entitled to vote on the merger: all stockholders of record of KCS common stock and KCS 4% non-cumulative preferred stock as of close of business on July 1, 2021.

Under the terms of the merger agreement, which was unanimously approved by the Board of Directors of each railroad, KCS stockholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share; KCS stockholders are expected to own approximately 12.65% of the combined company, CN and KCS reported. KCS’ preferred stockholders will receive $37.50 in cash for each preferred share.

(CN and KCS entered into a definitive merger agreement on May 21, ending weeks of a tug of war between CN and Canadian Pacific. CN’s offer was submitted to and determined by the KCS Board to be a “Company Superior Proposal.”)

If the merger is approved by stockholders as well as the Surface Transportation Board (STB), KCS will become a wholly owned subsidiary of CN. Additional merger information can be found in the definitive proxy statement that was filed July 7 with the U.S. Securities and Exchange Commission (download below).

“We are thrilled to be taking this important next step and giving KCS stockholders the opportunity to vote on the creation of the premier railway for the 21st century,” CN President and CEO JJ Ruest said. “Numerous stakeholders of both companies have voiced overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them. This combination delivers significant value to KCS stockholders along with the opportunity to participate in the significant upside of the combined company.”

“The filing of the definitive proxy statement represents an important milestone as we work toward completing this transaction,” KCS President and CEO Patrick J. Ottensmeyer said. “By joining with CN, KCS will provide our customers access to new single-line transportation services at the best value for their transportation dollar, while increasing competition among the Class I railroads. Together, CN and KCS will be positioned to deliver on the transaction’s powerful potential to create new growth opportunities for our customers, employees, labor partners, communities and stockholders.”

CN and KCS on July 6 submitted to the STB a reply to comments filed on the railroads’ voting trust agreement. A final STB decision on the trust could come by mid-July, at the earliest. Cowen and Company believes there to be an approximately 60% chance the STB approves it, according to Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl.