Kansas City Southern (KCS) has said that an offer from Canadian National Railway (CN) to acquire the business is a “superior proposal” to one originally put forward by Canadian Pacific (CP), World Grain reported on 14 May.
CP’s agreed deal would have created a combined rail company – the first US-Canada-Mexico rail network – called Canadian Pacific Kansas City (CPKS) that would expand to 32,186km (20,000 miles).
CN’s offer of US$33.6bn was higher than CP’s US$29bn bid, according to World Grain.
As a result of the decision on 13 May, KCS said it had notified CP that it intended to terminate KCS’s merger agreement with CP and enter into an agreement with CN, the report said.
CP had the right to negotiate amendments to the merger agreement for at least five days, World Grain wrote.
“We are delighted that KCS has deemed CN’s binding proposal superior, recognising the many compelling benefits of our combination and expressing confidence in CN’s ability to obtain the necessary approvals and successfully close the transaction,” CN president and CEO JJ Ruest was quoted as saying.
Following KCS’ decision CP issued a statement saying it would continue to contend that a potential CN-KCS merger faced a number of hurdles, World Grain reported.
“CP-KCS is a once-in-a-lifetime opportunity to not only protect all existing shippers’ options but to inject new competition and capacity into the North American transportation system,” the CP statement said.
In its statement, CP said it would not enter into a bidding war and would respond to KCS within the allotted time.