[ad_1]
The Canadian National Railroad Group has made a $ 33.7 billion bid for Kansas City Southern, including debt, as it tries to derail the deal the U.S. group reached last month with Pacific Canada.
The Montreal-based company has made an offer of cash and shares valued at Kansas City Southern at $ 325 per share, approximately 21% more than the agreed offer of the Canadian Pacific. However, it is likely to face greater regulatory scrutiny due to its size.
Under the terms of the agreement, Canadian National offered Kansas City Southern shareholders $ 200 in cash and 1,059 CN shares. Canadian Pacific offered $ 90 in cash and the rest in stock. To pay the deal, CP said it would issue 44.5 million new shares and increase debt by $ 8.6 billion.
Anyone who wins the Canadian battle for Kansas City Southern, the smallest of the seven Class 1 railroads carrying freight in the United States, will end the first major rail deal since 1999, when CSX and Norfolk Southern acquired Conrail and split it. between them.
A person close to Kansas City Southern said the U.S. group would seriously consider the rival bid, but warned it would be a tougher sale to the Surface Transportation Board, the U.S. rail freight regulator that will have to approve any combination.
A merger with any Canadian group would establish the first American railroad that spanned Mexico, the United States, and Canada. Canadian National, which announced its proposal on Tuesday, said its higher cash supply would give shareholders in southern Kansas City more security and reduce congestion and greenhouse gas emissions.
Both the Canadian National and the Canadian Pacific operate in the central and eastern U.S., as do CSX and Norfolk Southern, while Union Pacific and BNSF are present in the west.
Kansas City Southern is the only operator with north-south operations with a network of routes extending from Missouri to ports on both coasts of Mexico. It also owns a 50 percent stake in the Panama Canal Railway Company.
For both Canadian companies, the deal is one great commitment to trade recovery following the approval last year of the US-Mexico-Canada trade agreement, which replaced the US Free Trade Agreement.
Canadian National said the deal would allow the combined company to take advantage of a $ 8 billion market between the three countries, while aiming to add more services to key points in the network such as Laredo, Texas, southern Ontario and Detroit. .
Jean-Jacques Ruest, CEO of Canadian National, said in a letter to the South Kansas City board that the combination would generate $ 1 billion a year in synergies, primarily driven by new businesses rather than reducing costs.
The bidding war for Kansas City Southern comes in the middle of a wave of mergers and acquisitions activities over the past twelve months, as companies that thrived during the pandemic try to recoup assets to bolster their operations.
Shares of Canadian National have risen 70% since mid-March 2020 lows, although the company fell 5.9% in Toronto following the announcement of its rival offering.
[ad_2]
Source link
