Canadian National Railway, or CN, which operates the Kirk Yard in Gary and miles of rail in Northwest Indiana, outbid rival Canadian Pacific to buy Kansas City Southern and create a rail empire spanning North America.
Kansas City Southern, a cross-border rail line between the United States and Mexico that also has investments in Panama, rejected a proposed merger from Canadian Pacific that valued it at $29 billion and accepted CN's acquisition offer that valued it at $33.6 billion.
“We are delighted that Kansas City Southern has deemed CN’s binding proposal superior, recognizing 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 said. "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."
Montreal-based CN, which also operates the Markham Yard in Homewood, proposed to pay Kansas City Southern shareholders $325 per share in cash and stock — $200 in cash and 1.129 shares of CN common stock. It also will assume $3.8 billion worth of Kansas City Southern's debt.
“We are the better bid, better partner, better railway and best solution for KCS, and are pleased that the KCS Board of Directors has recognized the superiority of our proposal," Chairman Robert Pace said. "We look forward to continuing to engage constructively with KCS’ board to execute a definitive merger agreement in the near term and deliver the benefits of this transaction to both companies’ stakeholders.”
The company said it will connect North America's industrial corridor and facilitate trade between the United States, Canada and Mexico under the United States–Mexico–Canada Agreement.
"Together, CN and KCS will seamlessly connect ports and rails in the United States, Mexico and Canada by providing superior service, enhanced competition and new market access to move goods across North America safely and efficiently," Ruest said. "We are encouraged by the widespread support we have received for the transaction thus far and will continue to work closely with KCS and all relevant stakeholders to fully realize the benefits and opportunities available through a combined CN-KCS.”
The deal is expected to close in the second half of 2022, pending regulatory approval.
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