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Railroad operator Kansas City South on Sunday cancelled a $30 billion deal with Canadian Nationals, and instead chose a lower price of $27 billion from Canadian Pacific, which may face fewer regulatory hurdles.
This is the latest turning point in the months-long acquisition battle between the two Canadian railway companies. The two railway companies are seeking a rare opportunity to expand their presence in the United States by acquiring one of only seven major railway companies in North America. Influence.
“We are very happy to reach this important milestone and to pursue this once-in-a-lifetime partnership again,” Canadian Pacific CEO Keith Creel said in a statement.
“This merger proposal provides KCS shareholders with greater oversight and value certainty,” Creel added.
Kansas City Southern Airlines stated that it has notified the Canadian Nationals that it intends to terminate the merger agreement between the two parties. The Canadian Nationals will have five working days to make new bids.
Canadian Pacific’s bid valued the southern part of Kansas City at $300 per share and will be paid in a mixed form of stock and cash. Shares of Kansas City South closed at $280 per share on Friday.
Is the value per share of Canadian Pacific’s bid for the southern part of Kansas City
Canadian Pacific’s bid was lower than the previous bid of US$325 with Canadian Nationals. However, the U.S. Ground Transportation Commission, which oversees the railroads, rejected the transaction structure with the Canadian National Corporation.
Out of regulatory concerns, the Kansas City Southern Board of Directors stated earlier this month reconsider Quote from Canadian Pacific.
The merger between Canadian Pacific and Kansas City Southern Railways will remain the smallest of the remaining six large railway operators, and the merger with Canadian National Railways will become the third largest railway operator on the African continent.
Canadian nationals are entitled to a termination fee of US$1.4 billion. Among them, when Canadian Nationals beat its previous bid and will return it, it has paid 700 million US dollars to Canadian Pacific. Canadian Pacific has previously stated that it will pay the remaining $700 million that needs to be paid to National Canada.
As the pandemic eases and the re-signed trade agreement between the two countries is expected to boost cross-border freight volumes, the two companies have been working to build the first railroad across Canada, the United States and Mexico.