CN (TSX: CNR, NYSE: CNI) today issued the following statement
regarding CN’s proposed, pro-competitive combination with Kansas
City Southern (NYSE: KSU) (“KCS”) and Canadian Pacific Railway
Limited’s (TSX: CP, NYSE: CP) (“CP”) announcement that it has made
another inferior proposal to acquire KCS:
CN and KCS’ agreed transaction remains superior
and the best option for both companies’ stakeholders to deliver on
a combination that will enhance competition and provide new
servicing options for customers.
On May 21, 2021, CN and KCS announced that they
entered into a definitive merger agreement under which KCS
shareholders will receive $3251 per common share based on CN’s May
13, 2021 offer, which implies a total enterprise value of $33.6
billion, including the assumption of approximately $3.8 billion of
KCS debt. Under the terms of that transaction, which was
unanimously approved by KCS’ board of directors, KCS shareholders
will receive $200 in cash and 1.129 shares of CN common stock for
each KCS common share, with KCS shareholders expected to own 12.6%
of the combined company. CN’s proposal delivers an implied premium
of 45% to KCS shareholders as well as participation in the
significant upside of the combined company. CN’s accepted proposal
also reflects an 8% premium over CP’s latest inferior offer of $300
per share.
CN and KCS’ joint voting trust application,
which was filed on May 26, 2021, is currently under review by the
Surface Transportation Board (“STB”). We await the STB’s decision
following a comprehensive comment period which resulted in
overwhelming support from customers, suppliers, elected officials,
organized labor, local communities and other stakeholders. CN and
KCS are confident that the voting trust meets all the standards set
forth by the STB and believe that, after a fair and thorough review
by the STB, it should be approved. KCS shareholders will receive
the merger consideration immediately upon the closing of CN’s
voting trust.
Together, CN and KCS would create the premier
railway for the 21st century, connecting ports in the United
States, Mexico and Canada to expand North American trade and power
economic prosperity. We will continue to take the necessary steps
to deliver the many compelling benefits of this transaction to CN
and KCS stakeholders.
For more information on CN’s pro-competitive
combination with KCS, please visit www.ConnectedContinent.com.
About CN
CN is a world-class transportation leader and
trade-enabler. Essential to the economy, to the customers, and to
the communities it serves, CN safely transports more than 300
million tons of natural resources, manufactured products, and
finished goods throughout North America every year. As the only
railroad connecting Canada’s Eastern and Western coasts with the
U.S. South through a 19,500-mile rail network, CN, and its
affiliates have been contributing to community prosperity and
sustainable trade since 1919. CN is committed to programs
supporting social responsibility and environmental stewardship.
Forward-Looking Statements
Certain statements included in this news release constitute
“forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and under
Canadian securities laws, including statements based on
management’s assessment and assumptions and publicly available
information with respect to CN and KCS, regarding the proposed
transaction between CN and KCS, the expected benefits of the
proposed transaction and future opportunities for the combined
company. By their nature, forward-looking statements involve risks,
uncertainties and assumptions. CN cautions that its assumptions may
not materialize and that current economic conditions render such
assumptions, although reasonable at the time they were made,
subject to greater uncertainty. Forward-looking statements may be
identified by the use of terminology such as “believes,” “expects,”
“anticipates,” “assumes,” “outlook,” “plans,” “targets,” or other
similar words.
Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other
factors which may cause actual results, performance or achievements
of CN, or the combined company, to be materially different from the
outlook or any future results, performance or achievements implied
by such statements. Accordingly, readers are advised not to place
undue reliance on forward-looking statements. Important risk
factors that could affect the forward-looking statements in this
news release include, but are not limited to: the outcome of the
proposed transaction between CN and KCS; the parties’ ability to
consummate the proposed transaction; the conditions to the
completion of the proposed transaction; that the regulatory
approvals required for the proposed transaction may not be obtained
on the terms expected or on the anticipated schedule or at all;
CN’s indebtedness, including the substantial indebtedness CN
expects to incur and assume in connection with the proposed
transaction and the need to generate sufficient cash flows to
service and repay such debt; CN’s ability to meet expectations
regarding the timing, completion and accounting and tax treatments
of the proposed transaction; the possibility that CN may be unable
to achieve expected synergies and operating efficiencies within the
expected time-frames or at all and to successfully integrate KCS’s
operations with those of CN; that such integration may be more
difficult, time-consuming or costly than expected; that operating
costs, customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers or suppliers) may be greater than expected
following the proposed transaction or the public announcement of
the proposed transaction; the retention of certain key employees of
KCS may be difficult; the duration and effects of the COVID-19
pandemic, general economic and business conditions, particularly in
the context of the COVID-19 pandemic; industry competition;
inflation, currency and interest rate fluctuations; changes in fuel
prices; legislative and/or regulatory developments; compliance with
environmental laws and regulations; actions by regulators; the
adverse impact of any termination or revocation by the Mexican
government of KCS de México, S.A. de C.V.’s Concession; increases
in maintenance and operating costs; security threats; reliance on
technology and related cybersecurity risk; trade restrictions or
other changes to international trade arrangements; transportation
of hazardous materials; various events which could disrupt
operations, including illegal blockades of rail networks, and
natural events such as severe weather, droughts, fires, floods and
earthquakes; climate change; labor negotiations and disruptions;
environmental claims; uncertainties of investigations, proceedings
or other types of claims and litigation; risks and liabilities
arising from derailments; timing and completion of capital
programs; and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the United
States. Reference should also be made to Management’s Discussion
and Analysis in CN’s annual and interim reports, Annual Information
Form and Form 40-F, filed with Canadian and U.S. securities
regulators and available on CN’s website, for a description of
major risk factors relating to CN. Additional risks that may affect
KCS’s results of operations appear in Part I, Item 1A “Risks
Related to KCS’s Operations and Business” of KCS’s Annual Report on
Form 10-K for the year ended December 31, 2020, and in KCS’s other
filings with the U.S. Securities and Exchange Commission
(“SEC”).
Forward-looking statements reflect information
as of the date on which they are made. CN assumes no obligation to
update or revise forward-looking statements to reflect future
events, changes in circumstances, or changes in beliefs, unless
required by applicable securities laws. In the event CN does update
any forward-looking statement, no inference should be made that CN
will make additional updates with respect to that statement,
related matters, or any other forward-looking statement.
No Offer or SolicitationThis
news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to Find
ItIn connection with the proposed transaction, CN has
filed with the SEC a registration statement on Form F-4 to register
the shares to be issued in connection with the proposed
transaction, and the registration statement has been declared
effective. CN has filed with the SEC its prospectus and KCS has
filed with the SEC its definitive proxy statement in connection
with the proposed transaction, and the KCS proxy statement is being
sent to the stockholders of KCS seeking their approval of the
merger-related proposals. This news release is not a substitute for
the registration statement, the prospectus, the proxy statement or
other documents CN and/or KCS may file with the SEC or applicable
securities regulators in Canada in connection with the proposed
transaction.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE REGISTRATION STATEMENT, THE PROSPECTUS, THE PROXY STATEMENT AND
ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC OR APPLICABLE
SECURITIES REGULATORS IN CANADA CAREFULLY IN THEIR ENTIRETY IF AND
WHEN THEY BECOME AVAILABLE (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS THERETO) BECAUSE THEY CONTAIN AND WILL CONTAIN
IMPORTANT INFORMATION ABOUT CN, KCS AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain copies of these documents
(if and when available) and other documents filed with the SEC and
applicable securities regulators in Canada by CN free of charge
through at www.sec.gov and www.sedar.com. Copies of the
documents filed by CN (if and when available) will also be made
available free of charge by accessing CN’s website at www.CN.ca.
Copies of the documents filed by KCS (if and when available) will
also be made available free of charge at
www.investors.kcsouthern.com, upon written request delivered to KCS
at 427 West 12th Street, Kansas City, Missouri 64105, Attention:
Corporate Secretary, or by calling KCS’s Corporate Secretary’s
Office by telephone at 1-888-800-3690 or by email at
corpsec@kcsouthern.com.
ParticipantsThis news release
is neither a solicitation of a proxy nor a substitute for the
registration statement, the prospectus, the proxy statement or
other filings that may be made with the SEC and applicable
securities regulators in Canada. Nonetheless, CN, KCS, and certain
of their directors and executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information about CN’s executive officers and directors is
available in its 2021 Management Information Circular, dated March
9, 2021, as well as its 2020 Annual Report on Form 40-F filed with
the SEC on February 1, 2021, in each case available on its website
at www.CN.ca/investors/ and at www.sec.gov and
www.sedar.com. Information about KCS’s directors and executive
officers may be found on its website at www.kcsouthern.com and in
its 2020 Annual Report on Form 10-K filed with the SEC on January
29, 2021, available at www.investors.kcsouthern.com and
www.sec.gov. Additional information regarding the interests of such
potential participants is or may be included in the registration
statement, the prospectus, the proxy statement or other documents
filed with the SEC and applicable securities regulators in Canada
if and when they become available. These documents (if and when
available) may be obtained free of charge from the SEC’s website at
www.sec.gov and from www.sedar.com, as applicable.
Contacts:
MediaCanadaMathieu GaudreaultCN
Media Relations & Public Affairs(514)
249-4735Media@cn.caLongview Communications & Public
AffairsMartin Cej (403) 512-5730
mcej@longviewcomms.caUnited StatesBrunswick
GroupJonathan Doorley / Rebecca Kral(917) 459-0419 / (917)
818-9002jdoorley@brunswickgroup.comrkral@brunswickgroup.com |
Investment
CommunityPaul ButcherVice-PresidentInvestor Relations(514)
399-0052investor.relations@cn.ca |
1 All figures in U.S. dollars, except where
noted. All conversions between Canadian dollars and U.S. dollars
are based on a 0.827 foreign exchange rate as of May 12, 2021.
Where applicable, figures are based on the CN closing share price
on the NYSE of $110.76 as of May 12, 2021.
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