Canadian National has made a superior proposal to combine with KCS in a $33.7 billion, cash-and-stock transaction, according to the company’s press release. CN proposes a $325 per KCS share, representing 21% premium over implied value of CP transaction.
KCS shareholders will receive $200 in cash and 1.059 shares of CN common stock for each KCS common share.
CN’s superior proposal delivers greater value and certainty to KCS shareholders, as well as participation in the combined company.
The combined entity is expected to create the premier railway for the 21st century, seamlessly connecting ports and rails in the U.S, Mexico, and Canada
The combination expands the addressable market of CN and KCS and provides growth opportunities across the rapidly growing USCMA network.
CN estimates that the combination would result in EBITDA synergies of almost $1 billion annually, with the vast majority of synergies coming from additional revenue opportunities.
The transaction is expected to be accretive to CN’s adjusted diluted earnings per share in the first full year, after CN assumes control of KCS.
CN is currently declining. CNI: NYSE is down 7.60% on premarket.
