KCS, CP to restart merger talks

Kansas City Southern on Sept. 4 announced that its board unanimously determined that the unsolicited proposal received from Canadian Pacific on Aug. 31 to acquire KCS in a cash and stock transaction valued by CP at $300 per KCS share could reasonably be expected to lead to a "company superior proposal" as defined in KCS's merger agreement with CN.

KCS intends to provide CP with nonpublic information and to engage in discussions and negotiations with CP with respect to CP’s proposal, subject in each case to the requirements of the CN merger agreement.

KCS remains bound by the terms of the CN merger agreement, and KCS's board has not determined that CP’s proposal in fact constitutes a company superior proposal. In addition, KCS notes that there can be no assurance that the discussions with CP will result in a transaction.

CP last week week reaffirmed its offer originally submitted Aug. 10 and resubmitted Aug. 31 to combine with KCS. CP believes it ought to be deemed a superior proposal and has placed a deadline of Sept. 12 on that offer.

On Aug. 31, the Surface Transportation Board unanimously rejected CN and KCS's joint motion for approval for use of a voting trust. That clearly shows that the CN-KCS merger proposal is illusory and not achievable, CP officials said Sept. 5 in a prepared statement.

"We look forward to reengaging with the KCS Board of Directors to advance this unique and achievable Class I combination that provides compelling short- and long-term value," said CP President and Chief Executive Officer Keith Creel.