May 25, 2021

Willkie is representing BofA Securities and Morgan Stanley & Co. LLC, who are serving as financial advisors to Kansas City Southern.

On May 21, Canadian National Railway (CN) (TSX: CNR, NYSE: CNI) and Kansas City Southern (NYSE: KSU) announced that they have entered into a definitive merger agreement to combine in a $33.6 billion transaction. The announcement comes after KCS’s board of directors terminated its existing merger agreement with Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) to accept the superior proposal from CN.

Under the terms of the agreement, KCS shareholders will receive $325 per common share based on CN’s May 13, 2021 offer, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6% of the combined company. KCS’ preferred shareholders will receive $37.50 in cash for each preferred share.

The combination of CN and KCS is expected to further accelerate CN’s growth profile by connecting North America’s industrial corridor to create new options for shippers and new revenue for the combined company. The combination creates an express route that connects the U.S., Mexico and Canada with a seamless single-owner, single-operator service, and preserves access to all existing gateways.

Upon the closing of the transaction, CN will maintain corporate headquarters in Montreal, Canada, and establish Kansas City, Missouri, as the combined company’s United States headquarters.

Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., and a 50 percent interest in Panama Canal Railway Company. KCS' North American rail holdings and strategic alliances with other North American rail partners are primary components of a unique railway system, linking the commercial and industrial centers of the U.S., Mexico and Canada.

A transportation leader, CN transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year. As the only railroad connecting Canada’s Eastern and Western coasts with the U.S. South through a 19,500-mile rail network, CN and its affiliates have been contributing to sustainable trade since 1919.

The Willkie team is led by partners Steven Seidman and Laura Delanoy, and included associates Daniel Alster and Ian Morganelli and law clerk Joshua Mathew.

Click here to read Willkie’s April 21, 2021 announcement.