Canadian National on Tuesday unveiled a US $ 33.7 billion cash and equity bid to take over the railway company, exceeding the amicable bid it made last month. CPEstimated at $ 25 billion.
Suggestion CN Represents a 21% premium over the offer from CP And more than twice the monetary return, which not only translates into greater value, but also greater certainty for shareholders KCS, CEO confirmed CN Jean-Jacques Roest during a conference call to discuss the proposal.
Our superior access to the capital market, our stronger balance sheet, our lower financing costs and our ability to achieve higher and better synergies allow us to offer more attractive propositions to our shareholders. KCS.
In a brief press release, Kansas City Southern confirmed receipt
Unsolicited suggestion The CN He added that he would evaluate it and respond to it
right on time.
The CNOffers $ 200 in cash and 1.059 regular share of CN Per ordinary share of KCS . The bid was $ 317 per share based on stock quotes on Tuesday morning.
As for the friendly agreement concluded between CPAnd the KCS , It displays 0.489 of a share CP And $ 90 Cash Out For Every Shared Share Of KCS , Valued at $ 269 per share, depending on share price CP Mardi.
At first glance, though, the show CN Outperforms financially, we believe that the regulatory risk exposing it is higher than the risk CP , Which does not interfere with the network KCS – An element of a board of directors KCS It must be taken into account when evaluating a proposalIt was noted in the report of analyst Benoit Boerere of Desjardins.
No more interference with CN
During the conference call, Mr. Rust considered that the regroup CN–KCS It would lead to a $ 1 billion increase in EBITDA in three years, about 80% of which would come from new business, by convincing truck customers to use the railroad instead.
The remaining 20% will come from cost savings, even if it is CNHe says his network has very little direct interference with a network KCS .
Mr. Burier noted that the estimates of synergies were higher than those of $ 780 million cited In the show CP, Which may be partly explained by the greater overlap between the KCS’s rail networks and CN , Versus no interference between networks KCS And you CP .
Mr. Ruest explained that the show CNUnlike an offer, it will not require the approval of its shareholders CP .
Through direct competition at lower cost, with safer service and better fuel efficiency, from Mexico to the heart of America, the result will be a railway that is safer, faster, cleaner and stronger than any other group. KCS, He argued.
At the conference, Mr. Ruest added that the timing to present CNIt was opportunistic.
why now? board of directors KCSHe decided he wanted to crystallize the value for his shareholders, so now was the time.
In a letter to the board of directors KCSShow, Mr. Ruest said CN It displayed greater certainty of value due to its larger monetary component.
The CNIt plans to take on $ 3.8 billion in debt KCS As part of his plan.
The CN And the KCS It has a robust single-line and comprehensive service network between Mexico and Canada, with enhanced capacity to link ports in the Atlantic, Pacific and Gulf of MexicoMr. Ruest wrote in the letter.
The combined company will be the first railway line in Michigan and Eastern Canada to feature competitive service, resulting in increased fuel efficiency and customer service.
There are no comments from CP
When the Canadian Pacific and KCSAnnouncing their agreement last month, they said they would create the first railway network linking Canada, the United States and Mexico.
CEO of CPKeith Creel said at the time that the deal would be transformative for North America, as it would have significant positive impacts on employees, customers, communities and shareholders.
Regroup CPBased on KCS It will create a company that operates more than 32,100 km of railroads and generates total revenue of about $ 8.7 billion, according to 2020 data.
Spokesman CPHe said the company had no immediate comment.
Procedures KCSIt acquired 16% on Tuesday afternoon, and is trading at $ 298.48 on the New York Stock Exchange.
Title CNFor its part, it was down $ 9.44, or 6.4%, in the afternoon on the Toronto Stock Exchange, to trade at $ 138.72. Actions CP It lost $ 8.20, or 1.8%, to $ 449.70.
Best Rail Carriers in North America, by Revenue (in 2020) :
- BNSF ($ 26.1 g)
- Union Pacific (24.5 gm)
- Canadian National ($ 13.6 billion)
- CSX ($ 13.2 g)
- Norfolk Southern (12.3g)
- Canadian Pacific ($ 7.6 billion)
- Kansas City Southern ($ 3.3 gm)