CN to combine with Kansas City Southern

May 21, 2021

Torys is representing CN with a team that includes Rob Prichard, Mike Amm, Phil Symmonds, Jared Fontaine and Daniel Masliyah (corporate/M&A).

On May 21, 2021, CN and Kansas City Southern (“KCS”) announced that they entered into a definitive merger agreement to create the premier railway for the 21st century, bringing together highly complementary networks, seamlessly connecting ports and rails in the United States, Mexico and Canada, to benefit customers and enhance competition.

Unanimously approved by the Board of Directors of each company, under the terms of the agreement, KCS shareholders will receive US$325 per common share (based on CN’s offer made to KCS’ Board of Directors on May 13, 2021), which implies a total enterprise value of US$33.6 billion, including the assumption of approximately US$3.8 billion of KCS debt. KCS shareholders will receive US$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.

The cash portion of the consideration would be funded through a combination of cash-on-hand and approximately US$19 billion of new debt.

Completion of the transaction is expected to take place in the second half of 2022, after obtaining of all necessary regulatory approvals, including from the U.S. Surface Transportation Board (“STB”) and the Federal Economic Competition Commission (COFECE) and Federal Telecommunications Institute (IFT) in Mexico.

Further information can be found on Globe Newswire’s website.

CN is a world-class transportation leader and trade-enabler. Essential to the economy, to the customers, and to the communities it serves, CN safely transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year. As the only railroad connecting Canada’s Eastern and Western coasts with the U.S. South through a 19,500-mile rail network, CN and its affiliates have been contributing to community prosperity and sustainable trade since 1919.

KCS 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 with other North American rail partners are primary components of a unique railway system, linking the commercial and industrial centers of the U.S., Mexico and Canada.

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