U.S. railway operator Kansas City Southern said on Thursday it had accepted Canadian National Railway Co’s $33.6 billion acquisition offer, upending a $29 billion deal with its competitor Canadian Pacific Railway Ltd.
Below are the events that unfolded over several days as Canadian National and Canadian Pacific locked horns to take control of Kansas City Southern to create the first railway spanning the United States, Mexico and Canada, as they stand to benefit from a pick-up in trade.
MARCH 21: CANADIAN PACIFIC AGREES TO ACQUIRE KANSAS CITY SOUTHERN
Canadian Pacific agreed to acquire Kansas City Southern in a $25 billion cash-and-stock deal, which would be the largest ever combination of North American railways by transaction value.
MARCH 22: FARM GROUPS SHOW SUPPORT FOR CP-KCS DEAL
Farm groups said Canadian Pacific’s deal to buy Kansas City Southern would create a rail network from Canada to Mexico that could smooth the flow of their goods to market.
APRIL 20: CANADIAN NATIONAL TRUMPS CP’S OFFER
Canadian National offered to buy Kansas City for about $33.7 billion, trumping Canadian Pacific’s buyout offer for the railroad operator. Canadian National said it was willing to match the terms of Canadian Pacific’s offer for Kansas City Southern.
APRIL 21: CN KICKS OFF REGULATORY APPROVAL PROCESS FOR KCS DEAL
Canadian National informed the Surface Transportation Board (STB), which oversees freight rail service and rates in the United States, that it planned to file an application, seeking permission to combine with Kansas City Southern.
APRIL 21: CANADIAN PACIFIC RULES OUT RAISING BID FOR KCS
Canadian Pacific’s Chief Executive Keith Creel said the company would not raise its bid for Kansas City Southern and that bigger rival Canadian National’s offer is “not a real deal”. Creel said the company was not ready to put its “balance sheet at risk.”
APRIL 22: CN SHOWS CONFIDENCE IN DEAL GETTING APPROVAL
Canadian National informed Kansas City Southern’s board about its confidence in winning regulatory approvals for its offer for the U.S. railroad.
APRIL 23: LAWMAKER WARNS AGAINST RAILROAD CONSOLIDATION
Senior U.S. lawmaker said the potential acquisition of the Kansas City Southern should set off “alarm bells” about industry consolidation, warning Wall Street would make money from railroad consolidation, but the U.S. economy and workforce will suffer.
APRIL 24: U.S. REGULATOR GIVES CP EARLY WIN IN TAKEOVER WAR
The STB granted a waiver to Canadian Pacific’s bid for Kansas City Southern, which means the deal would not be subjected to the tougher railroad merger rules the regulator put in place in 2001. At the same time, Kansas City Southern said its board had determined that a competing offer from Canadian National could be expected to lead to a “superior proposal.”
APRIL 26: RAIL CUSTOMERS PICK SIDES IN THE TAKEOVER WAR
North America’s freight rail customers, from grain shippers to logistics companies, chose sides as the takeover war continued. Canadian National filed 409 letters of support with the STB, almost at par with Canadian Pacific’s stated level of support. Some companies like Coca-Cola Co and Conagra were publicly supporting both rail bids.
MAY 1: CP OBJECTS TO CANADIAN NATIONAL’s BID
Canadian Pacific filed a formal objection stating Canadian National’s rival bid for Kansas City does not qualify to be exempted from tougher merger rules as the CN-KCS deal would greatly expand the size of the fifth largest U.S. Class 1 railroad.
MAY 6: STB APPROVES CP’S VOTING TRUST FOR KCS DEAL
The STB approved the voting trust for Canadian Pacific’s proposed acquisition of Kansas City. Canadian Pacific had earlier agreed to bear most of the risk of the merger deal not going through. Canadian Pacific was going to buy Kansas City shares and place them in an independent voting trust, insulating the acquisition target from its control until the STB cleared the deal.
MAY 13: CANADIAN NATIONAL BEATS CP IN TAKEOVER WAR
Kansas City Southern accepted Canadian National’s bid, leaving Canadian Pacific with five business days to make a new offer. If Canadian Pacific were to table a new offer, a bidding war could ensue.
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