CALGARY, AB, Dec. 10, 2021 /CNW/ - Canadian Pacific Railway
Limited (TSX: CP) (NYSE: CP) ("CP") today welcomed the results of a
vote by Kansas City Southern ("KCS") stockholders in strong support
of the proposed CP-KCS combination.
"This week, shareholders of both CP and KCS overwhelmingly
supported this transformative proposal to create the first
U.S.-Mexico-Canada rail network," said Keith Creel, CP President and Chief Executive
Officer. "With strong shareholder support, we are excited to
complete the steps required to close the CP-KCS transaction into
the voting trust, a critical milestone in the journey to make
Canadian Pacific Kansas City a reality."
CP shareholders voted in favor of the combination during a
special meeting on Wednesday, Dec. 8,
2021. Today, KCS stockholders also voted in favour of a
proposal to adopt the CP-KCS merger agreement.
The transaction is expected to close into trust on Dec. 14, 2021. At the closing into trust, KCS
common stockholders will receive 2.884 CP common shares and
$901 in cash for each
share of KCS common stock held and KCS preferred stockholders will
receive $37.50 in cash for each share
of KCS preferred stock held, and, following completion of certain
transactional steps, all shares of capital stock of the successor
to KCS will be placed into trust.
As previously announced on Sept. 15,
2021, CP has agreed to acquire KCS 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's unaffected closing price on March 19, 2021.2
On Sept. 30, 2021, the U.S.
Surface Transportation Board ("STB") reaffirmed 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. Required Mexican regulatory approvals were
received in November.
CP control of KCS remains subject to the approval of the
STB. On Nov. 23, 2021, the STB
formally accepted the CP-KCS control application and issued a
procedural schedule. The STB's review is expected to be completed
in the fourth quarter of 2022.
Additional information regarding the combination can be found in
the management proxy circular dated Nov. 1,
2021, which has been filed with both Canadian and U.S.
securities regulators, including with the U.S. Securities and
Exchange Commission ("SEC").
For information on the benefits of a CP-KCS combination, visit
FutureForFreight.com.
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|
1 Except
where noted, all figures are in U.S. dollars.
|
2 Based on
KCS closing share price of $224.16 as of March 19, 2021 and CP
closing share price of CAD$91.50 (at 1.2565 FX rate) as of Aug. 9,
2021.
|
Forward-Looking Statements and Information
This news
release includes certain forward looking statements and forward
looking information (collectively, FLI) about CP, KCS and their
respective subsidiaries and affiliates. FLI is typically identified
by words such as "anticipate", "expect", "project", "will",
"estimate", "forecast", "plan", "intend", "target", "believe",
"likely" and similar words suggesting future outcomes or statements
regarding an outlook. All statements other than statements of
historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its nature, FLI
involves a variety of assumptions, which are based upon factors
that may be difficult to predict and that may involve known and
unknown risks and uncertainties and other factors which may cause
actual results, levels of activity and achievements to differ
materially from those expressed or implied by these FLI, including,
but not limited to, the following: the timing and completion of the
transaction and the combination of CP and KCS, including receipt of
regulatory approvals and the satisfaction of other conditions
precedent; interloper risk; the realization of anticipated benefits
and synergies of the transaction and the timing thereof; the
success of integration plans; the focus of management time and
attention on the transaction and other disruptions arising from the
transaction; changes in business strategy and strategic
opportunities; the actions and decisions of applicable regulatory
bodies, including the STB; estimated future dividends; financial
strength and flexibility; debt and equity market conditions,
including the ability to access capital markets on favourable terms
or at all; cost of debt and equity capital; potential changes in
the CP share price which may negatively impact the value of
consideration offered to KCS common stockholders; the ability of
management of CP, its subsidiaries and affiliates to execute key
priorities, including those in connection with the transaction;
general Canadian, U.S., Mexican and global social, economic,
political, credit and business conditions; risks associated with
agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities; the
effects of competition and pricing pressures, including competition
from other rail carriers, trucking companies and maritime shippers
in Canada, the U.S. and
Mexico; North American and global
economic growth; industry capacity; shifts in market demand;
changes in commodity prices and commodity demand; uncertainty
surrounding timing and volumes of commodities being shipped via CP
and KCS; inflation; geopolitical instability; changes in laws,
regulations and government policies, including regulation of rates;
changes in taxes and tax rates; potential increases in maintenance
and operating costs; changes in fuel prices; disruption in fuel
supplies; uncertainties of investigations, proceedings or other
types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; sufficiency of budgeted capital
expenditures in carrying out business plans; services and
infrastructure; the satisfaction by third parties of their
obligations; currency and interest rate fluctuations; exchange
rates; effects of changes in market conditions and discount rates
on the financial position of pension plans and investments; trade
restrictions or other changes to international trade arrangements;
the effects of current and future multinational trade agreements on
the level of trade among Canada,
the U.S. and Mexico; climate
change and the market and regulatory responses to climate change;
ability to achieve commitments and aspirations relating to reducing
greenhouse gas emissions and other climate-related objectives;
anticipated in-service dates; success of hedging activities;
operational performance and reliability; customer, regulatory and
other stakeholder approvals and support; regulatory and legislative
decisions and actions; the adverse impact of any termination or
revocation by the Mexican government of Kansas City Southern de
Mexico, S.A. de C.V.'s Concession;
public opinion; various events that could disrupt operations,
including severe weather, such as droughts, floods, avalanches and
earthquakes, and cybersecurity attacks, as well as security threats
and governmental response to them, and technological changes; acts
of terrorism, war or other acts of violence or crime or risk of
such activities; insurance coverage limitations; material adverse
changes in economic and industry conditions, including the
availability of short and long-term financing; and the pandemic
created by the outbreak of COVID-19 and its variants, and resulting
effects on economic conditions, the demand environment for
logistics requirements and energy prices, restrictions imposed by
public health authorities or governments, fiscal and monetary
policy responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be found
in reports and filings by CP and KCS with Canadian and U.S.
securities regulators, including any proxy statement, prospectus,
material change report, management information circular or
registration statement filed, or to be filed, in connection with
the transaction. Reference should be made to "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations—Forward Looking Statements" in CP's and KCS's
annual and interim reports on Forms 10-K and 10-Q. Due to the
interdependencies and correlation of these factors, as well as
other factors, the impact of any one assumption, risk or
uncertainty on FLI cannot be determined with certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
About Canadian Pacific
Canadian Pacific
(TSX: CP) (NYSE: CP) is a transcontinental railway in
Canada and the United States with direct links to major
ports on the west and east coasts. CP provides North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit www.cpr.ca to see the
rail advantages of CP. CP-IR
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SOURCE Canadian Pacific