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Rail News Home Kansas City Southern 8/9/2021 Rail News: Kansas City Southern
Kansas City Southern on Saturday announced leading independent proxy advisory firm Institutional Shareholder Services Inc. (ISS) has recommended that the Class I’s shareholders vote in favor of the proposed CN merger at a special stockholders meeting to be held on Aug. 19.ISS determined the premium, valuation and strategic rationale for the transaction are compelling. While Canadian Pacific — which also aims to acquire KCS — is soliciting votes against the CN-KCS merger, it has not provided KCS shareholders with any actionable alternative or one that bridges the divide between its initial offer and CN’s offer, ISS officials claim.“In voting to approve the transaction, shareholders would lock in the break fee. They would also advance the deal one step closer to completion,” ISS officials said in a press release.KCS leaders are encouraged that ISS supports its board’s unanimous recommendation that shareholders vote in favor of the combination.“In its report, ISS validates our belief that CN is the ideal partner for KCS to power the resurgence of North America’s industrial and agricultural corridors and enhance competition, and that this transaction is in the best interest of KCS and all of our stakeholders,” said KCS President and Chief Executive Officer Patrick Ottensmeyer. “We strongly urge [our] shareholders to follow the ISS’ recommendations and vote for the transaction.” On May 21, KCS and CN entered into a definitive merger agreement under which KCS shareholders would receive $200 in cash and 1.129 shares of CN common stock for each KCS common share. After the transaction closes, KCS shareholders would own about 12.65% of the combined company.

Rail News Home Kansas City Southern 8/2/2021 Rail News: Kansas City Southern
Kansas City Southern today responded to Canadian Pacific's filing last week of a preliminary proxy statement seeking votes against the CN-KCS merger proposal.In a prepared statement, KCS officials said that CP's filing "is part of an effort to defeat a transaction that offers KCS shareholders $50 per share more than CP was willing to offer."In May, CP decided not to take advantage of its five-business-day match right, per the terms of its initial merger contract, to compete with CN’s superior proposal. Since that time, CP has consistently criticized the CN-KCS combination, KCS officials said.KCS officials also noted that, even though CP claims in its latest filing that its "ready to re-engage with KCS," CP has not made a new proposal."Nor did it commit to making one in the future," they said, adding that there can be no assurances that CP will make an offer or proposal to KCS.KCS continues to recommend that its shareholders vote in favor of the CN combination.KCS's full statement is available here.

Rail News Home Kansas City Southern 7/8/2021 Rail News: Kansas City Southern
Kansas City Southern has scheduled for Aug. 19 a virtual special meeting of stockholders to vote on the proposed merger with CN.All stockholders of record of KCS common stock and 4% non-cumulative preferred stock as of the close of business on July 1, 2021, will be entitled to vote their shares at the special meeting, KCS and CN officials said in a press release.As previously announced on May 21, under the terms of the agreement KCS stockholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS stockholders expected to own approximately 12.65% of the combined company.KCS' preferred stockholders will receive $37.50 in cash for each preferred share. Additional information regarding the combination can be found in the definitive proxy statement that has been filed with the U.S. Securities and Exchange Commission.The KCS board unanimously recommends that stockholders vote for the merger agreement with CN and the other proposals outlined in the definitive proxy statement. CN will acquire KCS shares and place them into a voting trust if such trust is approved by the Surface Transportation Board (STB).KCS stockholders would receive the merger consideration immediately upon the closing into CN’s voting trust, which is expected to be in the second half of 2021, the companies said. Following that step, the STB and other regulatory authorities would complete their review of CN's control of KCS. Upon approval, the completion of the transaction to take the KCS shares out of the voting trust is expected to take place in the second half of 2022, they said.CN's prospectus and KCS' definitive proxy materials can be found on the SEC's website. The proxy materials are being mailed to all stockholders eligible to vote at the special meeting.Meanwhile, Canadian Pacific issued a statement in response to CN's recent filing with the STB replying to the many comments opposing CN's proposed voting trust."CN's reply doubles down on arguments for a voting trust that CP has already shown do not meet the board's public interest test and sweeps under the rug the many public interest costs associated with CN's proposed use of a trust," CP officials said in their statement, which can be read here.

Rail News Home Kansas City Southern 7/2/2021 Rail News: Kansas City Southern
Kansas City Southern yesterday released its 2020 sustainability report titled "For the Long Haul: Delivering Prosperity, Valuing People, Protecting the Planet."Available in the corporate responsibility section of kcsouthern.com, the report shows KCS in 2020:• improved its U.S. and Mexico consolidated frequency rate of reportable workplace injuries and illnesses by 27%;
• committed to do its part in the fight against climate change and partnered with the Science Based Target Initiative to set an ambitious carbon-reduction target. KCS has committed to reducing its scope 1 and 2 greenhouse gas emissions per million gross ton-miles at least 42% by 2034, from a 2019 base year;
• avoided the use of 21.2 million gallons of diesel fuel; this is an additional nearly 7 million gallons avoided compared to 2019 due to the implementation of fuel-efficient technologies; and
• held 24 diversity, equity and inclusion roundtable sessions across the United States and Mexico with its President and Chief Executive Officer Patrick Ottensmeyer and more than 200 participants. The forum provided employees a space to share their views on workplace equity, inclusion and opportunities for KCS improvements.The report follows the Global Reporting Initiative's latest standards for disclosing governance, economic, social and environmental topics and is in alignment with the Sustainability Accounting Standards Board and Task Force on Climate-related Financial Disclosures frameworks. The frameworks provide for the disclosure of measurable data and specific information related to sustainability, KCS officials said in a press release.

Rail News Home Kansas City Southern 6/30/2021 Rail News: Kansas City Southern
Kansas City Southern and Midstream Texas Operating LLC (MTO) today announced a long-term commercial agreement to provide truck-to-rail transloading services for petroleum and petrochemical shipments moving from Corpus Christi, Texas, into Mexico.Operations are expected to begin in the fourth quarter.On property leased from KCS, MTO will construct a transload facility — including siding tracks and facilities for loading and staging of 200 rail cars per month — under the project's initial phase.The facility will be "strategically close to supply locations and to the border for expedient access to end markets," said Ginger Adamiak, KCS vice president of energy and chemical products, in a press release."This service expansion offers our customers proven transportation to an attractive market. We are delighted to link with MTO's Ingleside terminal to offer seamless marine, truck and rail movements," added David Vattimo, MTO's chief executive officer.

Rail News Home Kansas City Southern 6/25/2021 Rail News: Kansas City Southern
CN and Kansas City Southern today highlighted what they describe as the benefits realized by grain customers, including farmer-owned grain co-operatives, through CN’s open gateways commitment in the CN-KCS combination.These stakeholders, including agricultural customers in the upper midwestern United States, would benefit from a choice of routes and competitive rates, better service and innovation resulting from the competition for their business, the two Class Is said in a press release.Their statement comes a day after Canadian Pacific announced that shippers of grain and other agricultural products across North Dakota, South Dakota and Minnesota have submitted letters to the Surface Transportation Board (STB) opposing CN's and KCS's combination, its use of a voting trust, or both.The letters describe how a potential CN-KCS combination and its proposed use of a voting trust would see reduced options for agricultural shippers in the Upper Midwest leaving them fewer direct competitive options, and eliminating the new network of shipping options a CP-KCS combination would create, CP officials said in a press release.Meanwhile, CN President and Chief Executive Officer JJ Ruest and KCS President and CEO Patrick Ottensmeyer yesterday co-authored an op-ed published in The Hill in which they explained why they believe the CN-KCS merger would supply critical infrastructure to shorten supply chains.The full Ruest/Ottensmeyer op-ed can be read here.

Rail News Home Kansas City Southern 6/21/2021 Rail News: Kansas City Southern
Canadian Pacific today announced that more than 80 additional stakeholders have filed statements with the Surface Transportation Board (STB) expressing concerns about CN and Kansas City Southern's combination, its use of a voting trust or both.The latest statements bring the total opposed to more than 330, CP officials said in a press release. Together, more than 1,050 letters have been filed in support of CP's proposed combination with KCS or in opposition to the CN proposal.The letters highlight the extensive risks the proposed CN-KCS voting trust poses to competition by reducing shipper options, CP officials said. Stakeholders also expressed strong concerns about the likelihood of reduced service quality and infrastructure investments as a result of the proposed merger.Meanwhile, last week CN and KCS announced that an additional 100 letters in favor of their proposed combination were filed with the STB, bringing the total number of support letters that CN and KCS have received to greater than 1,500. Of the 100 or so filed last week, 90 of the letters support CN's and KCS's request that the STB approve their proposed voting-trust agreement.

Rail News Home Kansas City Southern 6/16/2021 Rail News: Kansas City Southern
CN and Kansas City Southern yesterday announced that they jointly filed certain documents requested by the Surface Transportation Board (STB) to enable the STB to review the voting trust proposal as part of the CN-KCS merger agreement.With this filing, CN and KCS are one step closer to creating their merged railway. CN and KCS look forward to the STB’s review and are confident that their voting trust will be approved, officials with both organizations said in a press release.In response to the STB’s request for information about KCS’s pre-existing capital allocation policy, CN and KCS also submitted to the STB a statement from KCS Chief Financial Officer Michael Upchurch. In his statement, Upchurch emphasized the financial strength of KCS and its capital investment plans during the trust period.The STB filing, as well as additional information about CN’s pro-competitive combination with KCS, is available at www.ConnectedContinent.com.Meanwhile, Canadian Pacific announced yesterday that North America's largest railroad operating union, SMART-Transportation Division (SMART-TD), has submitted a letter urging the STB to reject CN’s proposed use of a voting trust in its KCS merger agreement.In contrast, the SMART-TD letter stated of CP’s proposed combination with KCS: “We anticipate growth in both rail businesses and jobs for SMART-TD members."CP continues to make a public case for its proposal to merge with KCS, which initially agreed to combine with CP but then pulled out of the pact to pursue a merger agreement with CN. 

Rail News Home Kansas City Southern 6/9/2021 Rail News: Kansas City Southern
The Surface Transportation Board (STB) yesterday issued a timetable for reviewing the voting trust in connection with the proposed merger between CN and Kansas City Southern.The timetable calls for the Class Is to file specific documents by June 14 and requires comments on the voting trust agreement by June 28, with replies due July 6.CN and KCS officials say their proposed voting trust is "identical" to the trust approved in Canadian Pacific's proposed acquisition of KCS. Earlier this year, CP and KCS had reached an agreement for a merger, but KCS pulled out of that agreement after receiving a "superior proposal" from CN."As CN and KCS explained in their May 26, 2021, motion for voting trust approval, the CN-KCS combination offers multiple public interest benefits, including seamless single-owner, single-operator service, new and faster routes, significant environmental protections and increased supply chain efficiency," CN and KCS said in a press release.Meanwhile, CP officials said the company will file comments by June 28 that explain "why the public interest costs of CN's proposed voting trust outweigh the non-existent benefits." CP remains "confident" that the STB will ultimately reject CN's proposal to use a voting trust in its KCS merger plan."CN's arguments in favor of a trust amount to the claim that CN and KCS should be able to decide what is in the public interest based on which railroad is offering more money to acquire KCS – that argument elevates private interests over the public interest," CP officials said in a press release.The STB's decision setting the timetable may be read here.

Rail News Home Kansas City Southern 6/9/2021 Rail News: Kansas City Southern
The Surface Transportation Board (STB) yesterday issued a timetable for reviewing the voting trust in connection with the proposed merger between CN and Kansas City Southern.The timetable calls for the Class Is to file specific documents by June 14 and requires comments on the voting trust agreement by June 28, with replies due July 6.CN and KCS officials say their proposed voting trust is "identical" to the trust approved in Canadian Pacific's proposed acquisition of KCS. Earlier this year, CP and KCS had reached an agreement for a merger, but KCS pulled out of that agreement after receiving a "superior proposal" from CN."As CN and KCS explained in their May 26, 2021, motion for voting trust approval, the CN-KCS combination offers multiple public interest benefits, including seamless single-owner, single-operator service, new and faster routes, significant environmental protections and increased supply chain efficiency," CN and KCS said in a press release.Meanwhile, CP officials said the company will file comments by June 28 that explain "why the public interest costs of CN's proposed voting trust outweigh the non-existent benefits." CP remains "confident" that the STB will ultimately reject CN's proposal to use a voting trust in its KCS merger plan."CN's arguments in favor of a trust amount to the claim that CN and KCS should be able to decide what is in the public interest based on which railroad is offering more money to acquire KCS – that argument elevates private interests over the public interest," CP officials said in a press release.The STB's decision setting the timetable may be read here.

Rail News Home Kansas City Southern 5/14/2021 Rail News: Kansas City Southern
CN has sweetened its offer to acquire Kansas City Southern. Under terms of its revised proposal, CN now would exchange each share of KCS common stock for $200 in cash and 1.129 shares of CN common stock, implying a total enterprise value of $33.6 billion.CN also has agreed to reimburse KCS $700 million in connection with a termination fee it would need to pay Canadian Pacific under their merger agreement if that deal is called off. As a result, KCS’ board has determined that CN’s revised proposal constitutes a “company superior proposal” as defined in KCS’s merger agreement with CP.KCS notified CP that it intends to terminate their merger agreement and enter into a definitive agreement with CN. CP retains the right to negotiate merger agreement amendments for at least five business days, and KCS’ board still could make a further determination as to whether any such amendments would cause the CN proposal to no longer constitute a company superior proposal.“We are delighted that KCS has deemed [our] binding proposal superior, recognizing the many compelling benefits of our combination and expressing confidence in CN’s ability to obtain the necessary approvals and successfully close the transaction,” said CN President and Chief Executive Officer JJ Ruest in a press release. “Our proposal offers a clear path to completion and is structured in a way that gives KCS shareholders both greater immediate value and the opportunity to participate in the future upside of the combined company.”CP plans to respond to KCS about any merger agreement amendments within the allotted time, CP officials said in a statement.It isn't surprising that CN would raise its offer, which highlights that railroad's recognition of the significant regulatory risks and challenges associated with "its anti-competitive bid,” CP officials said.“There is nothing new here; this doesn't make it any more likely that the CN proposal can close into a voting trust. The Surface Transportation Board already approved CP's use of a voting trust for its pro-competitive combination with KCS,” they said. “We believe that CP's negotiated agreement with KCS is the only true end-to-end Class I combination that is in the best interests of North American shippers and communities. As we've said repeatedly, we are not going to enter into a bidding war.”CP officials believe the mutually negotiated agreement with KCS represents compelling short- and long-term value for shareholders that’s actually achievable.

Rail News Home Kansas City Southern 5/13/2021 Rail News: Kansas City Southern
Kansas City Southern has promoted Timothy Livingston from general manager of network operations to vice president of transportation for the company’s operations in the United States and Mexico.Livingston joined KCS as a conductor in 2004 and has held transportation management positions in Arkansas, Louisiana, Texas, Oklahoma and Missouri before being promoted to GM of network operations."Throughout the evolution of KCS’ implementation of precision scheduled railroading, Tim has consistently demonstrated tremendous leadership," said KCS Executive VP of Operations John Orr in a press release. "He has a keen understanding of the value of a speak-up culture and operational balance, and how these elements lead to growth."Meanwhile, KCS earlier this week announced that it received notice of an unsolicited mini-tender offer by TRC Capital Investment Corp. to purchase up to 500,000 shares, or approximately 0.55%, of KCS’s outstanding common stock at a price of $285 per share in cash.As TRC Capital's own offer document acknowledges, the offering price is approximately 2.47% below the closing price per share of KCS on April 30, 2021, the last trading day before the mini-tender offer was commenced, KCS officials said.The officials also said the company does not endorse TRC Capital’s mini-tender offer and recommends that KCS shareholders reject the unsolicited offer and not tender their shares in response to the offer.Moreover, KCS recommends that any shareholders who have tendered shares to TRC Capital withdraw those shares by providing the written notice described in the offering documentation before the offer expires June 2.

Rail News Home Kansas City Southern 5/3/2021 Rail News: Kansas City Southern
Canadian Pacific late last week filed a formal objection with the Surface Transportation Board (STB) stating that CN does not qualify for a waiver of the STB's rules for major transactions with respect to CN's proposal to acquire Kansas City Southern.In its letter, CP states that the CN-KCS transaction does not satisfy the criteria that the STB relied upon in finding that the waiver should apply to a CP-KCS transaction, which the STB granted on April 23.Meanwhile, in other developments:
• CN today issued an open letter to the KCS community regarding CN’s proposal to combine with KCS. The letter outlines why CN believes a combined CN-KCS represents the best solution for all stakeholders and sets the record straight on the merits of the proposal.
• CP today announced that more than 110 customers and other stakeholders have filed letters with the STB to express concerns about and/or opposition to CN’s proposal for KCS. The letters from customers and other stakeholders highlight growing concerns that the CN-KCS combination would reduce competition in the Canada-U.S.-Mexico corridor, CP officials said in a press release.
• CN late last week announced that more than 200 additional letters in favor of its proposed KCS combination have been filed with the STB, bringing the total number of support letters CN has received to more than 600 in just over a week since its proposal was made public. That number exceeds the number of letters that CP has received in over five weeks, CN officials said in a press release.

Rail News Home Kansas City Southern 4/26/2021 Rail News: Kansas City Southern
Kansas City Southern’s board has unanimously determined that the unsolicited proposal received from CN last week to acquire KCS in a cash and stock transaction, valued by CN at $325 per share, could reasonably be expected to lead to a "company superior proposal" as defined in KCS’s merger agreement with Canadian Pacific.KCS intends to provide CN with nonpublic information and to engage in discussions and negotiations with CN, subject to the requirements of the CP merger agreement, KCS officials said in a press release. However, there's no assurance the talks with CN will result in a transaction, they said."We fully support the board of KCS in reviewing CN's offer," said CP President and Chief Executive Officer Keith Creel in a press release. "We are confident through this process that they will recognize this unsolicited bid is fraught with challenges, uncertainties and regulatory risks that are not present in the seamless, pro-competitive and pro-service CP-KCS combination."In March, CP and KCS announced a merger agreement in which CP would acquire KCS in a stock and cash transaction valued at $275 per KCS share. Meanwhile, the Surface Transportation Board (STB) ruled late last week that a waiver provision under 49 C.F.R. § 1180.0(b) applies to the potential transaction between CP and KCS. The 2001 merger regulation granted a waiver allowing a merger involving KCS and another Class I  to be considered under the STB’s pre-2001 merger regulations, subject to the board’s review. Per the board’s decision, the agency’s review of the transaction will be governed by the regulations set forth at 49 C.F.R. part 1180 (2000), STB officials said in a press release.In other related developments:
• CP announced it has no objection to CN’s request to also appoint David Starling as intended trustee in its unsolicited bid of KCS;
• CN announced that more than 400 customers, suppliers, elected officials and other stakeholders have filed letters with the STB in favor of CN's proposed combination with KCS.

Rail News Home Kansas City Southern 1/21/2021 Rail News: Kansas City Southern
The master planned park will offer 2.4 million square feet of potential building capacity for traditional warehousing and distribution.Photo – Kansas City Southern/YouTube