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CANADIAN PACIFIC KANSAS CITY LTD/CN 8-K Report, Agreement Terminated (May 27, 2021)

Filed May 27, 2021For Securities:CP

Summary

Canadian Pacific Kansas City Ltd. (CP) has officially terminated its previously announced merger agreement with Kansas City Southern (KCS). This termination follows KCS's decision to accept a superior proposal from Canadian National Railway Company (CN) and enter into a definitive agreement with CN. As a result of the termination, KCS has paid CP a breakup fee of $700 million in cash. CP stated it would not submit a counterproposal to KCS in response to CN's offer.

Key Highlights

  • 1Termination of the merger agreement between Canadian Pacific Railway Limited and Kansas City Southern, effective May 21, 2021.
  • 2Kansas City Southern has entered into a definitive agreement with Canadian National Railway Company (CN) after deeming CN's proposal a 'Company Superior Proposal'.
  • 3Canadian Pacific (CP) has received a termination fee of $700 million in cash from Kansas City Southern.
  • 4CP will not be making a counterproposal to acquire Kansas City Southern in response to the competing offer from CN.
  • 5CP intends to proceed with its application to the Surface Transportation Board (STB) seeking authority to control Kansas City Southern.
  • 6CP remains open to re-engaging with KCS should the agreement with CN be terminated or if CN is unable to acquire control.

Frequently Asked Questions

The merger agreement terminated because KCS deemed a competing proposal from Canadian National Railway Company (CN) as a 'Company Superior Proposal' and entered into a definitive agreement with CN. CP stated it would not make a counterproposal.

Canadian Pacific has received a $700 million cash termination fee from Kansas City Southern as a result of the agreement's termination.

Yes, CP has announced its intention to proceed with its application before the STB seeking authority to control KCS. They also stated they are available to re-engage with KCS if the agreement with CN is terminated or if CN is otherwise unable to complete the acquisition.

The initial agreement, announced on March 21, 2021, was for CP to acquire Kansas City Southern through a two-step merger process, pending regulatory approvals. This agreement has now been terminated.