Kansas City Southern has helped raise $ 34bn from Canada National against its Canadian Pacific counterpart, as the railroad war intensifies.
CN offered to pay participants KCS $ 200 in cash and 1.129 of it, from $ 200 cash and 1,059 shares of ordinary CN.
The total cost of the deal has not changed: KCS shareholders still pay $ 325 per share, but a large share of CN shares reflects the decline in the prices of railway teams from Montreal.
KCS, which was already agreed to be available and CP for $ 29bn in addition to the debt, they had to pay $ 700m to settle the agreement.
Any combination could lead to the first railway crossing Canada, the US and Mexico, a route that is expected to be boosted on the North American economy when it recovers from the coronavirus epidemic.
“After consulting with external legal and financial advisors, the KCS steering committee confirmed that the proposed CN proposal creates a ‘Company Superior Proposal’ as the KCS agreement has merged with the Canada Pacific Railway,” KCS said in a statement.
CP has five days to come back with a chance to win, which should cover about 20% of the premium offered by CN, in a battle that has been won over the war.
CP said it was still confident that its offerings could be successful because it said that in conjunction with CN it was facing major regulatory challenges.
“It is not surprising that CN will offer this, and it only shows that CN is aware of the dangers / difficulties associated with anti-competition,” CP said in a statement.
“The Surface Transportation Board has already approved the CP to take advantage of the opportunity to vote for the KCS competition,” it added.
Competition to buy the smallest of the seven class 1 categories that ship to the North American freight market has been a daunting effort to integrate the business since CSX and Norfolk Southern acquired Conrail in 1999 and distributed it among them.
The agreement comes next year Trade agreement in US-Mexico-Canada introduced the North American Trade Agreement, and promoted prospects for growth in cross-border business.
CN has been on the move ever since it played KCS, publishing ads and creating a website called Continental Links to attract sponsors in its bid.
“We want to do well, a good friend, a better railway and a better solution at KCS, and we are happy that the KCS board of directors has recognized the success of our ideas,” said Robert Pace, chairman of the CN committee on Thursday.