Benzinga | Aug 10, 2021 07:28AM EDT

Canadian Pacific Submits Proposal To Combine With Kansas City Southern Valuing Kansas City Southern At $300/Share

Stock and Cash Transaction Representing an Enterprise Value of Approximately $31 Billion

The Achievable, Pro-competitive CP-KCS Alternative Brings Compelling Short- and Long-term Value, More Regulatory Certainty

CALGARY, AB, Aug. 10, 2021 /CNW/ - Canadian Pacific Railway Limited (TSX:CP) (NYSE:CP) ("CP") today announced it has submitted a superior proposal to acquire Kansas City Southern ("KCS") in a stock and cash transaction representing an enterprise value of approximately USD$31 billion1, offering KCS stockholders an alternative recognizing the premium value of KCS while providing more regulatory certainty.

The proposed transaction, which has the unanimous support of the CP Board of Directors, values KCS at $300 per share, representing a 34% premium2, based on the CP closing price on August 9, 2021 and KCS unaffected closing price on March 19, 2021. Following the closing into a voting trust, common shareholders of KCS will receive 2.884 CP common shares and $90 in cash for each share of KCS common stock held. The proposed transaction includes the assumption of $3.8 billion of outstanding KCS debt.

This superior proposal represents improved terms to those agreed to in the CP-KCS merger agreement entered into on March 21, 2021 that are substantially similar to those in the CN merger agreement, but offers significantly higher regulatory certainty than the proposed CN merger and significantly higher value than our previously agreed combination.