What is the primary purpose of this 8-K filing?

This filing announces that Canadian Pacific Railway Limited (CP) has entered into a definitive Agreement and Plan of Merger with Kansas City Southern (KCS), effectively detailing the terms of their proposed merger and superseding KCS's prior agreement with Canadian National Railway Company (CN).

What is the total value of the merger consideration offered to Kansas City Southern shareholders?

For each share of KCS common stock, shareholders will receive 2.884 shares of CP common stock and $90 in cash. Preferred stockholders will receive $37.50 in cash per share.

How is Canadian Pacific financing this acquisition, including the termination fees?

CP has secured a $500 million unsecured term loan and an $8.5 billion senior unsecured bridge term loan facility. The $500 million loan is intended to finance a portion of the fees owed in connection with the termination of the prior CN agreement. The larger bridge facility is for funding the merger consideration and related expenses, with plans to replace it with permanent financing.

What are the key conditions that must be met for the merger to be completed?

The merger is subject to several conditions, including the adoption of the merger agreement by KCS stockholders, approval of the share issuance by CP shareholders, effectiveness of CP's registration statement, obtaining Mexican regulatory approvals (from COFECE and IFT), approval for listing CP shares on the NYSE and TSX, absence of prohibitive injunctions, and ultimately, approval by the Surface Transportation Board (STB), with KCS to be placed in a voting trust pending STB approval.

CP 8-K: Material Agreements & Financial Events

01—Abstract

Summary

Summary of the 8-K filed September 16, 2021. Cited figures are marked; the original filing is the authoritative source.

Canadian Pacific Railway Limited (CP) announced on September 15, 2021, that it has entered into a definitive Agreement and Plan of Merger with Kansas City Southern (KCS).

This filing details the termination of KCS's prior merger agreement with Canadian National Railway Company (CN) and the subsequent definitive agreement with CP. The transaction will be structured as a two-step merger, with KCS becoming a wholly-owned subsidiary of CP. Key financial aspects include a merger consideration of 2.884 CP common shares and $90^a in cash per KCS common share.

CP has also agreed to reimburse KCS for certain termination fees paid to CN, totaling $1.4 billion^b ($700 million for the Company Termination Fee and $700 million for the CP Termination Fee Refund). To finance these obligations and related expenses, CP has secured a $500 million unsecured term loan facility and an $8.5 billion bridge facility commitment, with plans to seek permanent financing.

The transaction is subject to customary closing conditions, including KCS stockholder approval, CP shareholder approval for share issuance, Mexican regulatory approvals, and STB approval, with KCS stock to be placed in a voting trust pending STB approval. This merger aims to create a single, integrated North American rail network, enhancing connectivity and efficiency.

02—Key points

Key Highlights

Canadian Pacific (CP) enters into a definitive Agreement and Plan of Merger with Kansas City Southern (KCS).
The merger consideration is set at 2.884 CP common shares and $90 in cash per KCS common share.
CP will reimburse KCS $700 million for the Company Termination Fee paid to CN and $700 million for the CP Termination Fee Refund, totaling $1.4 billion.
CP has secured a $500 million unsecured term loan and an $8.5 billion bridge loan commitment to fund merger-related payments and expenses.
The transaction structure involves a two-step merger, with KCS to be placed into a voting trust pending STB approval.
Key closing conditions include approvals from KCS stockholders, CP shareholders, Mexican antitrust authorities, and the STB.
The termination dates for the merger agreement are set for February 21, 2022, with an extension to May 21, 2022, if Mexican regulatory approvals are the sole remaining conditions.

03—Questions

Frequently Asked Questions

What is the primary purpose of this 8-K filing?
This filing announces that Canadian Pacific Railway Limited (CP) has entered into a definitive Agreement and Plan of Merger with Kansas City Southern (KCS), effectively detailing the terms of their proposed merger and superseding KCS's prior agreement with Canadian National Railway Company (CN).
What is the total value of the merger consideration offered to Kansas City Southern shareholders?
For each share of KCS common stock, shareholders will receive 2.884 shares of CP common stock and $90 in cash. Preferred stockholders will receive $37.50 in cash per share.
How is Canadian Pacific financing this acquisition, including the termination fees?
CP has secured a $500 million unsecured term loan and an $8.5 billion senior unsecured bridge term loan facility. The $500 million loan is intended to finance a portion of the fees owed in connection with the termination of the prior CN agreement. The larger bridge facility is for funding the merger consideration and related expenses, with plans to replace it with permanent financing.
What are the key conditions that must be met for the merger to be completed?
The merger is subject to several conditions, including the adoption of the merger agreement by KCS stockholders, approval of the share issuance by CP shareholders, effectiveness of CP's registration statement, obtaining Mexican regulatory approvals (from COFECE and IFT), approval for listing CP shares on the NYSE and TSX, absence of prohibitive injunctions, and ultimately, approval by the Surface Transportation Board (STB), with KCS to be placed in a voting trust pending STB approval.

04—Continue

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