Western Railroad Discussion > CN raises bid and wins KCS Board approval

CN has raised its bid for KCS
from $200 cash and 1.059 CN shares per KCS share
to $200 and 1.129 CN shares per KCS share

KCS Board has declared it a “Company Superior Proposal” as defined by the CPKCS merger agreement.

KCS has notified CP that it intends to terminate their merger agreement.

Under the agreement, CP has five business days to renegotiate its proposal.

https://www.kcsouthern.com/media/news/news-releases/kansas-city-southern-receives-revised-proposal-from-canadian-national-railway-that-board-of-directors-determines-is-a-company-superior-proposal



Edited 3 time(s). Last edit at 05/13/21 16:23 by Marcus.

Gonna get interesting real quick. Ben

Hey, it's only money.

Out 

It will be a sad day IMHO, if CN gets the KCS making a big portion of the gulf coast, and it's myriad of petroleum and chemical business a monopoly. Particularly Baton Rouge to New Orleans.
JB

As lead stockholders in CN, were Bill and Melinda Gates key decision makers with regard to the CN bid for KCS? 

The stock price action suggests a counter offer is expected.

Here comes the long expected counterbid from CP.

Of course the big questions are how does the STB and DOJ feel about this?

AaronJ Wrote:
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> Here comes the long expected counterbid from CP.

Hey, in that limited regard, this is like seeing the Conrail bidding war all over again, isn't it?  It's certainly more complicated than that, however in the public light, maybe not so complicated.  Who will win the biggest in the end?  Stockholders in KCS, maybe?

Regarding CN being willing to improve the exchange ratio....at first, the exchange yieled $125 (US) in CNI (ticker symbol of CN) and the enhanced offer yields $125 in CNI stock i.e. CNI had traded a little lower since the initial offer.

BobE

Lackawanna484 Wrote:
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> The stock price action suggests a counter offer is
> expected.


I'm not sure where you get that.  KSU (the ticker for KCS) closed at $313 and the CN bid was $325.  The CP bid was $275 and KCS was committed to that until it wan't.  By removing the lower bid from the equation, it only makes sense that KSU traded up----certainty of getting CN's $325.

For their part, CP has been adamant about not raising its price.  Basically playing a bad hand badly.

BobE

callum_out Wrote:
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> Hey, it's only money.
>
> Out 

Exactly, money talks and suckers walk...

JG

Let's see if CP has the money. If they don't it's game over.

My understanding is they were "all in" with their initial offer.

People wonder about Gamestop which was a $3 stock, KCS isn't Gamestop but the pattern is similar.

Out 

Little bit off topic but similar interest like when Jeff besos r Warren buffet biding for wholesale foods.

Posted from Android

"The proposal is binding on CN and may be accepted by KCS at any time prior to 5:00 pm EDT on Friday, May 21, 2021. The transaction would be subject to approval by the stockholders of KCS, approval by the Surface Transportation Board of a voting trust, receipt of other regulatory approvals and other customary closing conditions."

The increase in stock shares in the offer raises the value of the CN offer from $317.60 to $325.38 (based on today's closing stock prices). Basically CN has increased their offer to match the $325 offered April 19th.

KCS closed at $313.45 so CN's offer remains higher than the current KCS stock price.
CP's stock went past $400 today making the value of their offer $286.06 (based on today's closing stock prices).
CP could match CN's price by offering 0.587 shares of CP stock instead of 0.489 shares of CP stock per KCS share.

We are about to become a country ruled by Ottawa! At least everyone likes Canadians, "Americans" not so much these days--but it's getting better. Cornwallis is about to have the last laugh!



Edited 1 time(s). Last edit at 05/13/21 22:03 by RRBaron.

DevalDragon Wrote:
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> Let's see if CP has the money. If they don't it's
> game over.


People thought the same thing when the Soo and C&NW were bidding for the Milwaukee. The Soo was the lower final bidder, yet won. We may get an indication of what may be coming when the STB rules on CN's request for a voting trust. If the STB decides that CN must sell significant parts of KCS or they intend to impose other serious conditions, they might deny a voting trust.

BobE Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > The stock price action suggests a counter offer
> is
> > expected.
>
>
> I'm not sure where you get that.  KSU (the ticker
> for KCS) closed at $313 and the CN bid was $325. 
> The CP bid was $275 and KCS was committed to that
> until it wan't.  By removing the lower bid from
> the equation, it only makes sense that KSU traded
> up----certainty of getting CN's $325.
>
> For their part, CP has been adamant about not
> raising its price.  Basically playing a bad hand
> badly.
>
> BobE

I was looking at the options. I agree the cash market favors CN.

It should be interesting to see what CN has to give up to pass regulatory muster. It may be a lot.

Posted from Android

Lackawanna484 Wrote:
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> It should be interesting to see what CN has to
> give up to pass regulatory muster. It may be a
> lot.
>

Yep. As much as folks want to focus on the north-south lines of KCS, it is highly unlikely CN would maintain control of KC to New Orleans. CN isn't stupid as they know this...hence why they can throw absurd money at KCS since they know some of that will be coming back to them via CP getting KC-New Orleans. Rather, for CN this is about gaining the less discussed east-west connections into KC, Dallas, and Houston along with connection to KCSdeM at Laredo.