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Canadian Pacific

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Darts

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Jan 15, 2017
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to buy Kansas City Southern. This is a huge deal with more than just economic ramifications.

CP started life with capital provided by British investors. It negotiated a deal with the Canadian government to build the railway (with Chinese labor) in return for the land and the mineral rights underneath. At one time it created more Canadian millionaires than any other Canadian company.
Canadian Pacific Railway to buy Kansas City Southern for $25B US | CBC News
 
Darts said:
to buy Kansas City Southern. This is a huge deal with more than just economic ramifications.

CP started life with capital provided by British investors. It negotiated a deal with the Canadian government to build the railway (with Chinese labor) in return for the land and the mineral rights underneath. At one time it created more Canadian millionaires than any other Canadian company.
Canadian Pacific Railway to buy Kansas City Southern for $25B US | CBC News
Click to expand...

This will be a really strategic North-South network and right in the middle of the continent too. If they can work out a deal/purchase with HBR they'll have access to all 4 coasts.

ExAJF1lUYAQfL2v.jpg
 
Buy CP stock now! Caveat: Take this advice at your own risk!

The natural flow of trade in North America is actually north/south and not east/west. I think most Canadians don't understand the significance of this deal, if it goes through. No doubt, the lefties led by Jane Fonda will try to block it. After killing Keystone XL, the lefties need another target.
 
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Darts said:
Buy CP stock now! Caveat: Take this advice at your own risk!

The natural flow of trade in North America is actually north/south and not east/west. I think most Canadians don't understand the significance of this deal, if it goes through. No doubt, the lefties led by Jane Fonda will try to block it. After killing Keystone XL, the lefties need another target.
Click to expand...
As long as they keep their head office in calgary.

When CN bought the Illinois Central 20 years ago, they moved most of their operations down the USA leaving Montreal as a shell of a head office.
 
james t kirk said:
As long as they keep their head office in calgary.
Click to expand...
Yes, they said they will keep their Calgary (formerly Montreal) head office. I was still living in Quebec when they demolished the Van Horne mansion.

"The Van Horne Mansion (French: Maison Van Horne) was a classic greystone house on Sherbrooke Street at the corner of Stanley Street in Montreal's Golden Square Mile. It was built in 1869 for John Hamilton, President of the Merchant's Bank of Montreal, Quebec. In 1889, Sir William Cornelius Van Horne, President of the Canadian Pacific Railway, purchased the property and it remained in his family until it was controversially demolished in 1973. Despite the public outcry over its proposed"

van horne.jpg
 
Darts said:
Buy CP stock now! Caveat: Take this advice at your own risk!

The natural flow of trade in North America is actually north/south and not east/west. I think most Canadians don't understand the significance of this deal, if it goes through. No doubt, the lefties led by Jane Fonda will try to block it. After killing Keystone XL, the lefties need another target.
Click to expand...


They are still whispering of a 6 for 1 stock split later this year.
 
And now CN is getting into the mix. Offering over $5B more for KCS than CP.

www.theglobeandmail.com

CN Rail tops CP with offer of $30-billion for Kansas City Southern

In a letter to Kansas City Southern’s board of directors, Canadian National said it is offering US$325 a share in cash and stock for the U.S.-based rail company
www.theglobeandmail.com www.theglobeandmail.com

Canadian National Railway Co. has made a competing offer for Kansas City Southern, topping a bid by Canadian Pacific Railway Co. CP-T -0.62%decrease
CP-T -0.62%decrease

Montreal-based CN CNR-T -7.29%decrease
said on Tuesday it has offered US$29.9-billion in cash and stock for the U.S.-based railway, attempting to block CP's purchase of KCS KSU-N +14.40%increase
for US$25.2-bilion. That deal was recommended by KCS's board but requires approval of shareholders and regulators.

CN said in a statement its purchase of KCS, whose network extends into Mexico, could yield US$1-billion in cost savings.

"We firmly believe our proposal is far superior to KCS' existing agreement with CP because it offers superior financial value over the immediate and long term, a more complementary strategic fit, greater choice and efficiencies for customers, and enhanced benefits for employees and local communities," said Robert Pace, CN's chairman.

In a letter to KCS's board of directors, CN said it is offering US$200 and 1.059 CN shares for each KCS stock for a value of US$325 a share, in addition to assuming US$3.8-billion in debt.

Under the CP deal, KCS shareholders will receive 0.489 of a CP share and US$90 in cash for each stock.

KCS's shares traded at US$256 on Monday on the New York Stock Exchange.

CN has proposed placing the shares in a voting trust pending regulatory approval, similar to CP's plan.

The bidding war for Missouri-based KCS could lead to the first takeover of a major U.S. railway in more than 20 years.

Headquartered in Kansas City, KCS is a coveted railway based on its network that begins in the industrial and agriculture heartland of the United States and reaches south to the port of New Orleans and Mexico's Gulf and Pacific ports.

Any takeover of KCS will face close scrutiny by the U.S. regulator, the Surface Transportation Board. It requires that rail takeovers foster competition and do not reduce choices for the companies that rely on the rails to reach markets. However, KCS is the smallest of the big railways that operate in the United States, and the STB has not said if it will apply this standard to any deal involving KCS.

Calgary-based CP said its takeover of KCS would offer few competitive concerns, given their networks do not overlap. Like KCS, CN's tracks run south to New Orleans, but are farther east.

CP is expected to counter with a higher offer, said Christian Wetherbee, an analyst at Citi Group in New York. "While we thought CP's initial bid was elevated … we believe it's likely that CP remains engaged and may try to come back with a higher bid," Mr. Wetherbee said. "This clearly would stretch valuation, but could be justified by the long-term growth potential of the combined entity."

He said the Canadian railway that misses the chance to buy KCS will likely turn to the two big eastern U.S. railways, CSX Corp. and Norfolk Southern Corp. The two western carriers, BNSF Railway and Union Pacific Railroad, could jump in, as well.

"Both Canadian rails have indicated that they feel that missing out on [KSC] would be a competitive disadvantage, but there can only be one buyer," he said. "So while a bidding war is possible, it seems fairly likely that the loser of that war would have to look for another target, which could likely be CSX or Norfolk Southern."

Benoit Poirier, a stock analyst at Desjardins Securities, said CN's offer is 18 per cent higher than that of CP. However, he said CN could face a tougher battle than CP before the U.S. regulator, given the larger Canadian railway's route has some overlap with the target.

"At first glance, while CN's offer is superior from a financial standpoint, we believe the regulatory risk for its offer is higher than that for CP, which has no network overlap with KSU—something that KSU's board will have to consider when evaluating the proposal, in our view," Mr. Poirier said.

CP and KCS did not immediately respond to requests for comment.
 
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CN will have a harder time getting approval from the US government than CP would.
 
I recall reading that CN had a partnership with the KCS railway so I’d be curious to see how this will impact their strategy going forward: will they maintain the partnership or go on their own acquisition binge?

Since there is a lot of anti pipeline sentiment, will there be more rail traffic or will there be opposition to that in light of the Quebec rail disaster we had a few years back.

I love to hear others opinions here because this will have huge implications.
 
Kansas City Southern to scrap CP Rail deal after revised US$33.6-billion offer (CN)


MONTREAL - Kansas City Southern Inc. says it is terminating its merger agreement with CP Rail after determining that rival Canadian National Railway's revised US$33.6-billion offer was superior.

Under terms of the agreement announced Thursday evening, Montreal-based CN Rail will pay US$200 cash and 1.129 shares of CN stock for each of Kansas City's 90.9 million shares.

The sum includes a US$700-million break fee payable to Calgary-based Canadian Pacific Railway

The U.S. railway says it has notified CP Rail that it intends to terminate its agreement.

CP Rail now has the right to amend its offer, with the KCS board to determine whether a revision constitutes a better offer than CN's.

The transaction is subject to approval by KCS shareholders, approval by the U.S. railway regulator of a voting trust and other regulatory approvals.



www.cp24.com

Toronto, Canada and Global Breaking News – CP24

Most recent News stories and video from CP24
www.cp24.com www.cp24.com
 
"Under terms of the agreement announced Thursday evening, Montreal-based CN Rail will pay US$200 cash and 1.129 shares of CN stock for each of Kansas City's 90.9 million shares."

CP was offering only $90 cash plus CP stock. Wonder where CN is getting all that cash?
 
Some interesting news....



Canadian National’s offer would be subject to approval by Kansas City Southern stockholders.

It would also need authorization from U.S. regulators to use a voting trust, a mechanism requested by Kansas City Southern that allows shareholders to get paid while awaiting full approval for a merger. The U.S. Surface Transportation Board already had approved Canadian Pacific’s use of a trust.

The board also hasn’t yet decided whether strict antitrust rules will govern Canadian National’s proposal. It has ruled that a takeover by the smaller Canadian Pacific would be judged under more forgiving competition standards.
 
CP comes back with a better offer. Difference of only $25 per share now.

calgary.ctvnews.ca

CP Rail makes sweetened bid for Kansas City Southern valued at US$31B including debt

Canadian Pacific Railway Ltd. has sweetened its takeover offer for Kansas City Southern with a US$31 billion bid for the U.S. railway.
calgary.ctvnews.ca calgary.ctvnews.ca


CALGARY -- Canadian Pacific Railway Ltd. is making a new takeover offer for Kansas City Southern that values the U.S. railway at US$31 billion.

The new bid comes ahead of a vote on Aug. 19 by Kansas City Southern shareholders on a rival offer by Canadian National Railway Co. valued at US$33.6 billion.

However, CP Rail said it believes its offer is more likely to be approved by U.S. regulators.

"At the time of CN's offer in May, we chose to not make a revised offer because we believed that engaging in a bidding war with CN would have been value destructive to CP shareholders," CP Rail CEO Keith Creel wrote in a letter to the KCS board.

"However, we believe that now is the right time for us to re-engage with KCS, as the regulatory uncertainty of the proposed CN merger has placed KCS stockholders in the unfortunate position of having to vote on the proposed CN merger and, as a consequence of approving such proposal, eliminate KCS's ability to consider superior offers, all the while not having any level of certainty with respect to whether the STB will approve CN's use of a voting trust."

CP Rail has urged KCS shareholders to reject the CN deal because of the regulatory uncertainty of its rival's offer.

CN is awaiting a decision by the U.S. Surface Transportation Board on the railway's plan to set up a voting trust that would acquire KCS and hold the company during the regulator's review of the overall deal.

The STB has already approved CP Rail's use of a voting trust.

CP Rail had signed a deal in March to buy KCS for about US$275 per share, but CN topped that offer and secured support from the KCS board for its proposal in May.

Under CP Rail's new offer, KCS shareholders would receive 2.884 CP Rail shares and US$90 in cash for each common share held, representing a value of about US$300 per share.

The CN proposal would see KCS shareholders receive US$200 in cash and 1.129 CN shares for each share in an offer valued at about US$325 per share.

Both deals include the assumption of about US$3.8 billion in Kansas City Southern's debt.

This report by The Canadian Press was first published on Aug. 10, 2021.
 
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