Posts Tagged ‘Class 1 railroad mergers’

CP-KCS Deal to Close Today, STB Sets Hearing for CSX-Pan Merger

December 14, 2021

Canadian Pacific is expected to assume ownership of Kansas City Southern today (Dec. 14, 2021).

The $31 billion acquisition was approved by shareholders of both companies last year, but a merger of the two companies is pending review by the U.S. Surface Transportation Board.

KCS will continue to operate as an independent company during the review period and be placed in a blind trust until the STB rules in what is expected to be the fourth quarter of 2022.

During this period, management of KCS is expected to remain the same.

In an unrelated development involving Class 1 railroad mergers, the STB has set hearing dates of Jan. 13-14, 2022, for the proposed merger of CSX and New England regional railroad Pan Am Railways.

The hearing will be held online on Jan. 13 with time reserved for the following day if needed.

Those wishing to address the Board must file a notice of intent to participate by Dec. 20.
The STB also said last week that it will not require an environmental and historic review in the CSX acquisition of Pan Am.

KCS Stockholders OK Merger With CP

December 10, 2021

Stockholders of Kansas City Southern voted overwhelmingly on Friday in favor of a merger with Canadian Pacific.

KCS said the merger won approval of 99.6 percent of the votes cast. Earlier in the week CP shareholders approved the merger by a similar tally.

CP has proposed acquiring KCS in a stock and cash transaction by which KCS common share holders will receive $90 in cash and 2.844 CP shares for each KCS share held.

KCS preferred shareholders will receive $37.50 in cash. The deal is expected to close on Dec. 14 at which time KCS will be placed in a voting trust while the U.S. Surface Transportation Board reviews the proposed merger.

If the merger wins regulatory approval, the surviving company will be known as Canadian Pacific Kansas City.

The STB is expected to rule on the merger by the fourth quarter of 2022. The merger earlier received approval of regulators in Mexico.

CP Shareholders OK Merger with KCS

December 8, 2021

Shareholders of Canadian Pacific today approved a merger with Kansas City Southern. KCS shareholders will vote on the merger on Friday.

The vast majority of CP stockholders approved the $31 billion deal, which involves CP buying KCS and putting it in a blind trust while U.S. regulators consider the merger.

Terms of the deal include CP issuing 277 million shares of CP common stock to KCS common stock holders.

Review of the merger by the U.S. Surface Transportation Board is expected to take much of 2022.

If the merger is approved the surviving company will operate as Canadian Pacific Kansas City.

Mexico Approves CP-KCS Merger

November 27, 2021

The Mexican Federal Economic Competition Commission on Friday approved a proposed merger of Canadian Pacific and Kansas City Southern.

Mexican approval was needed because KCS has rail lines in that country.

The merger, which involves CP buying KCS, must still be reviewed by the U.S. Surface Transportation Board, a process that is expected to take about year.

At present CP and KCS continue to operate as independent entities, but if shareholders of both companies approve the deal later this month CP plans to place KCS into a blind trust owned by CP.

STB Accepts CP-KCS Merger Application

November 24, 2021

The merger application filed by Canadian Pacific and Kansas City Southern has been accepted by the U.S. Surface Transportation Board.

Regulators are expected to take up to a year to review the merger bid, which the carriers formally sought in October.

The STB thus turned aside objections by Union Pacific and Canadian National that the CP-KCS merger application was incomplete (UP) or filed too soon (CN)

 “The Board finds that the Application is complete as it contains all information required by the Board’s regulations. Accordingly, the Application is accepted,” the board wrote in accepting the CP-KCS application.

CP Shareholders to Vote Dec. 8 on KCS Acquisition

November 4, 2021

Shareholders of Canadian Pacific will meet Dec. 8 to consider the planned acquisition of Kanas City Southern.

The meeting will be held online and is open to shareholders who held CP common stock as of the close of business Nov. 1.

CP is buying KCS in a cash and stock transaction valued at $31 billion. Shareholders of KCS must also approve the deal.

STB Outlines Review Schedule for CP-KCS Merger

November 3, 2021

The U.S. Surface Transportation Board has outlined the procedural schedule it will follow in considering the proposed merger of Canadian Pacific and Kansas City Southern.

The STB has proposed a 245-day proceeding with a series of deadlines for public comment and the filing of briefs.

A final decision on the merger would likely be issued in fall 2022 under that schedule.

The Board also has posted for public review the 4,342-page merger application of the two Class 1 railroads which plan to operate as Canadian Pacific Kansas City if the merger is approved.

The STB’s procedural schedule can be found at: https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1635884078941/50974.pdf

CP, KCS Outline Post-Merger Plans to STB

November 2, 2021

Canadian Pacific and Kansas City Southern have filed with the U.S. Surface Transportation Board what they termed a “control application” that outlines their operating plans if their proposed merger is approved by regulators.

In a news release the two Class 1 systems said they plan to keep all existing freight rail gateways open “on commercially reasonable terms.”

The document also outlines how the merged company, to be known as Canadian Pacific Kansas City, will seek to seek to attract freight traffic to its post-merger network linking Canada, the United States and Mexico.

CP plans to acquire KCS in a stock and cash transaction of about $31 billion that values KCS at $300 per share.

STB Reaffirms CP-KCS Voting Trust Agreement

October 4, 2021

The U.S. Surface Transportation Board last week voted to affirm an earlier decision approving a plan by Canadian Pacific to place Kansas City Southern stock into a voting trust while regulators consider a proposal to merge the two Class I railroads.

The Board earlier approved the voting trust plan on May 6. Although the STB voted on Sept. 30 to affirm that plan, member Robert Primus dissented.

The STB said “it is not a foregone conclusion that the [prior] approval remains effective where a merger agreement is terminated but later revived, in the instant situation, among other things, the voting trust described in the applicants’ amended notice is substantively identical to that approved by the Board on May 6, 2021, and the Board found that the modified financial terms of CP’s offer would not impact the operation of the voting trust. However, the Board retains continuing jurisdiction to order modifications and correct future problems that may come to its attention.”

Primus said he objects to the CP-KCS merger being considered under the Board’s pre-2001 rules, via a waiver that applies to KCS.

“The topic of railroad consolidation has long been a public concern,” he said. “Past efforts to consolidate have been viewed as both necessary and disruptive to our national rail network. In the 1990s, as the number of Class I’s quickly shrank, concern over consolidation grew. The Board’s resulting adoption of the current merger rules in 2001 was the appropriate response to this concern—in particular, its insistence that the public interest be a major component in the consideration of any voting trust and merger application. Now, 20 years later, the Board is once again front and center in the debate over consolidation and the future of the network. In the interest of the public good and for the well-being of the national rail network, any further consolidation of the Class I’s should be subjected to the current merger rules, which call for the Board to consider whether the public interest is best served by a merger agreement’s proposed voting trust. For these reasons, I respectfully dissent.”

CP-KCS Outline Merger Timeline, New Name

September 17, 2021

Canadian Pacific and Kansas City Southern said on Thursday that shareholders of their respective companies will vote on their proposed merger in December.

The two railroads expect regulatory authorities in Mexico to review the merger over the next two to four months.

A merger application will be filed with the U.S. Surface Transportation Board in October and railroad officials are hoping to gain approval by October or November 2022.

The merged company is expected to be named Canadian Pacific Kansas City. It will have U.S. headquarters in Kansas City, but its primary headquarters will be in Calgary.

KCS is expected to be placed into a voting trust in the first quarter of 2022 with former KCS CEO David Starling serving as trustee.

The shareholders of KCS will receive $300 per share in a combination of cash and CP stock, which represents a 34 percent premium to the value of KCS stock price before the CP-KCS merger initially was announced last March. KCS shareholders will own 28 percent of CPKC.

CPKC will be the smallest North American Class 1 system by revenue.

Rail officials envision CPKC having $820 million in annual revenue growth from new traffic opportunities and $180 million in cost and efficiency savings.

KCS CEO Patrick Ottensmeyer said his CP counterpart Keith Creel suggested putting Kansas City into the new railroad’s name and making Kansas City the system’s U.S. headquarters.

Creel will serve as CEO of CPKC and continue to be based in Calgary.

He expects some shippers and Class I railroads will ask the STB for concessions as part of the merger review process but doesn’t expect there to be as many as have been granted in previous Class I mergers because the CP-KCS combination does not involve significant route overlap or a reduction in railroad options for some shippers.

Creel also said CPKC will keep all existing gateways and interchanges open as it seeks traffic growth, but added, “I’m not here to go to war with UP (Union Pacific) or BNSF or CN (Canadian National) or CSX or NS (Norfolk Southern).”