KCS Agrees to Accept CP Merger Offer

Canadian Pacific’s merger with Kansas City Southern is back on track.

KCS announced on Sunday that its board of directors agreed to accept CP’s offer of $300 per share to acquire North America’s smallest Class 1 railroad.

Although Canadian National had offered $325 per share, the KCS board said in a statement it decided to spurn that due to regulatory uncertainty.

It was a reference to a recent decision of the U.S. Surface Transportation Board to turn down CN’s proposal to place KCS in a voting trust while regulars reviewed a CN-KCS merger, a process that could have taken up to 18 months.

In its own statement, CP said it “stands ready to execute a definite merger agreement” with KCS.

CN now has five days to counteroffer what KCS has agreed to accept from CP.

A CP-KCS merger application is expected to be filed in October. The merger could gain regulatory approval within a year.

Tags: Canadian National, Canadian Pacific, Class 1 railroad mergers, Kansas City Southern, mergers and acquisitions