Kansas City Southern said it would take a fresh look at a $27 billion offer to buy Canadian Pacific Railway Ltd and hold talks with the company after a recent regulatory ruling jeopardised a rival bid that the US railway had already accepted.
The board has determined that CP's offer is "reasonably expected" to lead to a better offer, Kansas City Southern said in a statement Saturday. The company intends to open its books to a potential buyer.
As Thai ตลาด forex เปิดกี่โมง assures, the move opens the door for Kansas City Southern to walk away from the $30 billion deal to be acquired by Canadian National Railway Co. City Southern shareholders will be paid before the full merger is even approved.
"We look forward to re-engaging with the KCS board of directors," CP chief executive Kate Creel said in a statement Saturday. CP has set a deadline of September 12 for its offer.
Two Canadian companies have been vying for months for the rare opportunity to acquire a railway in the US. The winner will be the first railway to operate in Canada, the US and Mexico, where South Kansas City generates about half its revenue.
Bids and counters
The chase for Southern Kansas City, the smallest of the seven major US and Canadian railways, originally began a year ago with a $20 billion takeover bid by Blackstone Group Inc. and Global Infrastructure Partners, which was rejected. In March this year, Canadian Pacific and Kansas City Southern reached a $25 billion merger agreement.
Canadian National responded with a $30 billion offer in April, and Kansas City Southern broke the deal with Canadian Pacific and opted for a higher offer. In August, Canadian Pacific made a final attempt to attract Kansas City Southern shareholders by raising its bid to $27 billion, which, while lower, gives more certainty of regulatory approval, chief executive Keith Creel said at the time. Kansas City Southern rejected the proposal, but postponed a shareholder vote on the Canadian national agreement until the STB could rule on the voting trust.
The STB's decisive opinion, which questions the duplication of operations between Canadian National and Kansas City Southern and endorses possible future mergers, signals that the deal is unlikely to win approval. This has given Creel the opportunity to push his proposal again and he has given Kansas City Southern until 12 September to accept it.
Canadian Pacific's renewed campaign also has the advantage because the STB had already approved its voting trust in May and decided to consider the proposal under less stringent merger rules.
In a ruling against Canadian National's voting fund, the STB said the two proposals were "substantially different", with Canadian Pacific representing an "end-to-end merger" with no duplication of operations.
Canadian National CEO Jean-Jacques Rust can still increase his proposal to influence shareholders. But without a voting trust, investors would have to wait for compensation until after the approval process, which could take more than a year. The risk of the regulator rejecting the deal has increased significantly following the BWU's decision. Ruest also came under pressure from shareholders, including TCI Fund Management, to abandon the acquisition.
