Calgary Alberta - Canadian Pacific Railway Limited (CP) today announced it has filed a proxy statement asking Kansas City Southern (KCS) shareholders to vote "AGAINST" the proposed CN/KCS combination at the KCS special meeting of stockholders on 19 Aug 2021 so that CN's proposed acquisition can be decided at a later date, when more information will be available to KCS's stockholders.
 
"CP has always said it wanted to do a friendly deal with KCS and that remains true. CP would have preferred not to appeal directly to KCS's stockholders, but given the impending vote on CN's proposal, we believe we have no choice. What we are doing here is simply contesting the vote on the CN/KCS proposal because a yes vote now would lock KCS stockholders in until February 2022, instead of their being free to consider other, better, options. We want to ensure KCS stockholders are aware that a vote today, without the benefit of an STB decision on the CN voting trust proposal, and without a chance to consider other proposals until the spring of next year, would not be in their best interests," said Keith Creel, CP President and Chief Executive Officer.
 
While the outcome of the STB's decision on the CN voting trust cannot be known at this stage, KCS stockholders should be aware that voting to approve the CN/KCS merger while there is this level of regulatory uncertainty comes with severe consequences that are not in the KCS stockholders' best interests.
 
Under the terms of KCS's merger agreement with CN, following receipt of KCS stockholder approval of the merger, KCS will no longer be permitted to consider any alternative proposals.
 
KCS also will be unable to terminate its merger agreement with CN in connection with any proposal that is superior to the CN/KCS merger.
 
KCS stockholders will not have another opportunity to vote on the merger.
 
Effectively, this means that if STB voting trust approval is not received, and/or continues to be litigated, and KCS stockholders have already approved the CN/KCS merger, KCS will be locked into the proposed CN merger until 21 Feb 2022, the end date under the CN merger agreement, instead of being free to pursue other opportunities that may be in the best interests of KCS stockholders.
 
Until there is more certainty on how the STB will decide on CN's voting trust, KCS stockholders should not be asked to vote in favor of the CN/KCS merger and foreclose their opportunity to consider other potential superior proposals.
 
Author unknown.