BREAKING NEWS: KCS declares CP proposal 'superior,' will terminate CN deal

Kansas City Southern today announced that its board has determined that Canadian Pacific's revised proposal constitutes a “company superior proposal” as defined in KCS’s merger agreement with CN.

The KCS board made this determination after consultation with the company's outside legal and financial advisers, according to a KCS press release.

Under the terms of CP's proposal, each share of KCS common stock would be exchanged for 2.884 CP common shares and $90 in cash. In addition, holders of KCS preferred stock would receive $37.50 in cash for each share of KCS preferred stock held.

The proposal is binding on CP and may be accepted by KCS at any time prior to 5 p.m. EDT on Sept. 20. The transaction would be subject to approval by the stockholders of CP and KCS, receipt of regulatory approvals and other customary closing conditions.

KCS has notified CN that it intends to terminate their merger agreement and enter into the definitive agreement with CP, subject to CN’s right to negotiate amendments to the merger agreement for at least five business days and the KCS board's further determination as to whether any such amendments would change the superior proposal designation.

CP stands ready to execute a definitive merger agreement to create the first U.S.-Mexico-Canada railway to enhance competition in the North American rail network, CP officials said in a press release.

"We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership," said Keith Creel, CP's president and chief executive officer. "As we have said throughout this process, CP remains committed to everything this opportunity presents. This merger proposal provides KCS stockholders greater regulatory and value certainty. We are excited to move forward as we work toward making this perfect match a reality."