Nearly 260 Statements from Shippers and
Supporters Filed with the Surface Transportation Board in Support
of CP-KCS Combination
Shippers and Supporters Anticipate Increased
Efficiency and Market Reach, Enhanced Competition and North
American Economic Growth
Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (“CP”) and
Kansas City Southern (NYSE: KSU) (“KCS”) today announced they have
received statements from nearly 260 shippers, other railroads,
economic development authorities, ports, and other supporters for
their planned combination that would create the first rail network
connecting the U.S., Mexico, and Canada. Many of these supporters
requested the Surface Transportation Board (“STB”) to review the
transaction as swiftly as possible so the systems could be
integrated and the end-to-end benefits of this combination can be
realized for the benefit of all stakeholders. The statements and
letters were filed with the STB.
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Shippers and supporters across North American regions and
industries – including Maersk, Hyundai Glovis, Kraft, Nestlé,
Hapag-Lloyd, North Dakota Grain Dealers Association, Evergreen,
Boise Cascade Wood Products Building Materials, Ragasa Industrias
S.A., and Ag Processing – stated they expect the combination would,
among other benefits, invigorate transportation competition, expand
access to existing and growing markets, and provide new service
offerings that would improve transit times and reliability. In
addition, the nation’s largest short-line holding railroad company,
Genesee & Wyoming, has filed in support of the combination, as
well as other short-line railroads.
Joining seamlessly in Kansas City, Mo., in America’s heartland,
CP and KCS together would connect customers via single-network
transportation offerings between points on CP’s system throughout
Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’
system throughout Mexico and the South Central U.S.
The CP-KCS combination is expected to provide an enhanced
competitive alternative to existing rail service providers and is
expected to result in improved service to customers of all sizes.
Grain, automotive, auto-parts, energy, intermodal, and other
shippers, would benefit from the increased efficiency and
simplicity of the combined network, which is expected to spur
greater rail-to-rail competition and support customers in growing
their rail volumes. The single integrated rail system would also
connect premier ports on the U.S. Gulf, Atlantic and Pacific coasts
with key overseas markets.
While remaining the smallest of six U.S. Class 1 railroads by
revenue, the combined company would be a much larger and more
competitive network. The transaction is also expected to create
jobs across the combined network. Additionally, efficiency and
service improvements are expected to achieve meaningful
environmental benefits.
CP is seeking approval from the STB for the combination, which
also remains subject to the approvals of CP and KCS shareholders
and other customary closing conditions. The STB review is expected
to be completed by the middle of 2022.
For more information on the transaction and the benefits it is
expected to bring to the full range of stakeholders, visit
www.FutureForFreight.com.
Forward Looking Statements and Information
This news release includes certain forward-looking statements
and forward-looking information (collectively, FLI) to provide CP
and KCS shareholders and potential investors with information about
CP, KCS and their respective subsidiaries and affiliates, including
each company’s management’s respective assessment of CP, KCS and
their respective subsidiaries’ future plans and operations, which
FLI may not be appropriate for other purposes. FLI is typically
identified by words such as “anticipate”, “expect”, “project”,
“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. In particular, this news release
contains FLI pertaining to, but not limited to, information with
respect to the following: the transaction; the combined company’s
scale; financial growth; future business prospects and performance;
future shareholder returns; cash flows and enhanced margins;
synergies; leadership and governance structure; and office and
headquarter locations.
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, including receipt of regulatory and shareholder
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;
estimated future dividends; financial strength and flexibility;
debt and equity market conditions, including the ability to access
capital markets on favorable terms or at all; cost of debt and
equity capital; the previously announced proposed share split of
CP’s issued and outstanding common shares and whether it will
receive the requisite shareholder and regulatory approvals;
potential changes in the CP share price which may negatively impact
the value of consideration offered to KCS shareholders; 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 México; industry capacity; shifts in market
demand; changes in commodity prices; uncertainty surrounding timing
and volumes of commodities being shipped; 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; labor
disputes; changes in labor costs and labor difficulties; risks and
liabilities arising from derailments; transportation of dangerous
goods; timing of completion of capital and maintenance projects;
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 México; climate change and the
market and regulatory responses to climate change; anticipated
in-service dates; success of hedging activities; operational
performance and reliability; customer, shareholder, 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
México, 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 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 to be filed in connection with the
transaction. 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.
Non-GAAP Measures
Although this press release includes forward-looking non-GAAP
measures (adjusted diluted EPS, Free cash flow, earnings before
interest, tax, depreciation and amortization (EBITDA), and a
leverage ratio being adjusted net debt to adjusted earnings before
interest, tax, depreciation and amortization (EBITDA)), it is not
practicable to reconcile, without unreasonable efforts, these
forward-looking measures to the most comparable GAAP measures
(diluted EPS, Cash from operations, Net income, and long-term debt
to net income ratio, respectively), due to unknown variables and
uncertainty related to future results. These unknown variables may
include unpredictable transactions of significant value. Please see
Note on forward-looking Statements above for further
discussion.
About Canadian Pacific
Canadian Pacific 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 cpr.ca to see the rail advantages of CP. CP-IR
About KCS
Headquartered in Kansas City, Mo., Kansas City Southern (KCS)
(NYSE: KSU) is a transportation holding company that has railroad
investments in the U.S., Mexico and Panama. Its primary U.S.
holding is The Kansas City Southern Railway Company, serving the
central and south central U.S. Its international holdings include
Kansas City Southern de Mexico, S.A. de C.V., serving northeastern
and central Mexico and the port cities of Lázaro Cárdenas, Tampico
and Veracruz, and a 50 percent interest in Panama Canal Railway
Company, providing ocean-to-ocean freight and passenger service
along the Panama Canal. KCS’ North American rail holdings and
strategic alliances are primary components of a railway network,
linking the commercial and industrial centers of the U.S., Mexico
and Canada. More information about KCS can be found at
www.kcsouthern.com.
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO
FIND IT
CP will file with the U.S. Securities and Exchange Commission
(SEC) a registration statement on Form F-4, which will include a
proxy statement of KCS that also constitutes a prospectus of CP,
and any other documents in connection with the transaction. The
definitive proxy statement/prospectus will be sent to the
shareholders of KCS. CP will also file a management proxy circular
in connection with the transaction with applicable securities
regulators in Canada and the management proxy circular will be sent
to CP shareholders. INVESTORS AND SHAREHOLDERS OF KCS AND CP ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND MANAGEMENT PROXY
CIRCULAR, AS APPLICABLE, AND ANY OTHER DOCUMENTS FILED OR TO BE
FILED WITH THE SEC OR APPLICABLE SECURITIES REGULATORS IN CANADA IN
CONNECTION WITH THE TRANSACTION WHEN THEY BECOME AVAILABLE, AS THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT KCS, CP, THE TRANSACTION
AND RELATED MATTERS. The registration statement and proxy
statement/prospectus and other documents filed by CP and KCS with
the SEC, when filed, will be available free of charge at the SEC’s
website at www.sec.gov. In addition, investors and shareholders
will be able to obtain free copies of the registration statement,
proxy statement/prospectus, management proxy circular and other
documents which will be filed with the SEC and applicable
securities regulators in Canada by CP online at investor.cpr.ca and
www.sedar.com, upon written request delivered to CP at 7550 Ogden
Dale Road S.E., Calgary, Alberta, T2C 4X9, Attention: Office of the
Corporate Secretary, or by calling CP at 1-403-319-7000, and will
be able to obtain free copies of the proxy statement/prospectus and
other documents filed with the SEC by KCS online 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.
You may also read and copy any reports, statements and other
information filed by KCS and CP with the SEC at the SEC public
reference room at 100 F Street N.E., Room 1580, Washington, D.C.
20549. Please call the SEC at 1-800-732-0330 or visit the SEC’s
website for further information on its public reference room. This
communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to appropriate
registration or qualification under the securities laws of such
jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
U.S. Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION OF PROXIES
This communication is not a solicitation of proxies in
connection with the transaction. However, under SEC rules, CP, KCS,
and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies in
connection with the transaction. Information about CP’s directors
and executive officers may be found in its 2021 Management Proxy
Circular, dated March 10, 2021, as well as its 2020 Annual Report
on Form 10-K filed with the SEC and applicable securities
regulators in Canada on February 18, 2021, available on its website
at investor.cpr.ca and at www.sedar.com and www.sec.gov.
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. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the interests of such
potential participants in the solicitation of proxies in connection
with the transaction will be included in the proxy
statement/prospectus and management proxy circular and other
relevant materials filed with the SEC and applicable securities
regulators in Canada when they become available.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210331006035/en/
Canadian Pacific Media Jeremy Berry Tel:
403-819-0571 jeremy_berry@cpr.ca; alert_mediarelations@cpr.ca
Investment Community Chris De Bruyn Tel: 403-319-3591
investor@cpr.ca Kansas City Southern Media C. Doniele
Carlson Tel: 816-983-1372 dcarlson@kcsouthern.com Investment
Community Ashley Thorne Tel: 816-983-1530
athorne@kcsouthern.com
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