CN Rail Makes Competing Offer For Kansas City Southern

Apr 21, 2021

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CN Rail has made a competing proposal to combine with Kansas City Southern (KCS) railway in a cash-and-stock transaction valued at $33.7 billion.
CN says its proposal represents a 21% premium over implied value of CP Rail's transaction, wich was announced last month.
“We firmly believe our proposal is far superior to KCS’ existing agreement with CP because it offers superior financial value over the immediate and long-term, a more complementary strategic fit, greater choice and efficiencies for customers and enhanced benefits for employees and local communities. We look forward to engaging constructively with KCS’ Board and all relevant stakeholders to deliver this superior transaction,” said Robert Pace, Chair of the Board of CN.
CN currently estimates that the combination would result in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) synergies approaching $1 billion annually, with the vast majority of synergies coming from additional revenue opportunities.
“CN is ideally positioned to combine with KCS to create a company with broader reach and greater scale, and to seamlessly connect more customers to rail hubs and ports in the U.S., Mexico and Canada. CN and KCS have highly complementary networks with limited overlap that will enable them to accelerate growth in single-owner, single-operator, endto-end service across North America. With safer service and better fuel efficiency on key routes from Mexico through the heartland of America, the result will be a safer, faster, cleaner and stronger railway,” added JJ Ruest, president and chief executive officer of CN.
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