Merger activity decreased last week with three new deals announced and one deal completed.
The bidding war for Kansas City Southern (KCS) came to an end last week after the company’s Board of Directors determined that the acquisition proposal KCS received from Canadian National Railway Company (CN) constituted a superior proposal. Following this determination, KCS terminated the Canadian Pacific Railway (CP) merger agreement and entered into a merger agreement with CN (CNI). KCS paid CP a breakup fee of $700 million, which will be reimbursed by CN.
The deal between Kansas City and Canadian National has come through despite Canadian Pacific consistently arguing that a tie-up between Kansas City and Canadian National would have trouble getting approved by antitrust regulators. CN and KCS, however, are confident that they will obtain all necessary regulatory approvals. CN has also proposed a “plain vanilla” voting trust, which states that “Upon KCS shareholder approval of the transaction, and satisfaction of customary closing conditions, CN will acquire KCS shares and place them into the voting trust. KCS shareholders will receive the merger consideration immediately upon the closing of CN’s voting trust, which is expected to be in the second half of 2021.”
In an interesting turn of events, The US Surface Transportation Board (STB) has rejected the voting trust plan proposed by Canadian National when it has earlier agreed to a similar plan by Canadian Pacific Railway.
You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.