Filed by Canadian National Railway Company
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: Kansas City Southern
Commission File No.: 001-04717
Date:
May 14, 2021
On May 13, 2021, Canadian National Railway Company (CN) issued the following news release.
North Americas Railroad
NEWS RELEASE
CN PROPOSAL DEEMED
SUPERIOR BY KANSAS CITY SOUTHERN
CNs enhanced proposal of $3251 per
share values KCS at an enterprise value of $33.6 billion
With Confirmatory Due Diligence Complete, CN Looks Forward to
Promptly Entering into Merger Agreement with KCS
MONTREAL, May 13, 2021 CN (TSX: CNR, NYSE: CNI) today announced
that following the completion of confirmatory due diligence, it submitted an enhanced binding superior proposal and merger agreement to the Kansas City Southern (NYSE: KSU) (KCS) Board of Directors. The KCS Board has determined CNs
proposal to be a Company Superior Proposal and has announced its intention to terminate the previously executed March 21, 2021 merger agreement with Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (CP). CN looks
forward to promptly entering into a definitive merger agreement with KCS to create the premier railway for the 21st century.
CNs proposal offers KCS shareholders $325 per common share based on yesterdays closing price of CN shares, which implies a total enterprise value
of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. Under the terms of CNs revised proposal, KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share,
with KCS shareholders expected to own 12.6% of the combined company. This represents an implied premium of 45% when compared to KCS unaffected closing stock price on March 19, 2021. KCS preferred shareholders will continue to
receive $37.50 in cash for each preferred share. Under the terms of the revised proposal, a wholly owned subsidiary of CN has also agreed to reimburse $700 million to KCS in connection with their payment of the termination fee to CP under the
merger agreement with CP.
We are delighted that KCS has deemed CNs binding proposal superior, recognizing the many compelling benefits of our
combination and expressing confidence in CNs ability to obtain the necessary approvals and successfully close the transaction. Our proposal offers a clear path to completion and is structured in a way that gives KCS shareholders both greater
immediate value and the opportunity to participate in the future upside of the combined company. Together, CN and KCS will seamlessly connect ports and rails in the United States, Mexico and Canada by
1
|
All figures in U.S. dollars, except where noted. All conversions between Canadian dollars and U.S. dollars are
based on a 0.827 foreign exchange rate as of May 12, 2021. Where applicable, figures are based on CN and CP closing share prices on the NYSE of $110.76 and $391.87, respectively, as of May 12, 2021.
|