Canadian National Expected to Sweeten Kansas City Southern Bid
May 13 2021 - 02:04PM
Dow Jones News
By Dana Cimilluca and Cara Lombardo
Canadian National Railway Co. is expected to sweeten its
takeover bid for Kansas City Southern, according to people familiar
with the matter, as it seeks to outflank a rival and clinch a $30
billion deal for the railway operator.
The new proposal could include an agreement to cover the $700
million breakup fee Kansas City Southern would owe Canadian Pacific
Railway Ltd. should it walk away from their existing merger
agreement in favor of a deal with Canadian National, the people
said. It couldn't be learned what else a new proposal might
contain, including any adjustment to the consideration.
The move could pave the way for Kansas City Southern to switch
its allegiance to Canadian National, something it has indicated it
might do. Kansas City Southern's board is expected to convene soon
and could make a decision on the matter then, some of the people
said.
Kansas City Southern had asked Canadian National, which put in a
bid seeking to wrest the railroad operator from Canadian Pacific
last month, to make adjustments to its proposal, the people
said.
There's no guarantee Canadian National will submit a revised bid
or that Kansas City Southern would deem it superior. Should
Canadian National win Kansas City Southern's endorsement, Canadian
Pacific would have a five-day period to sweeten its offer or walk
away with the breakup fee.
The agreement with Canadian Pacific includes a $1 billion
reverse breakup fee, which Canadian Pacific would owe Kansas City
Southern if their deal is terminated for reasons including delays
tied to regulatory reviews. Canadian National had proposed the same
terms and Kansas City Southern has asked for more, but Canadian
National is leaning toward holding firm on that aspect of its bid,
some of the people said.
(More to come)
Ted Mann contributed to this article.
Write to Dana Cimilluca at dana.cimilluca@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
May 13, 2021 14:49 ET (18:49 GMT)
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