The submission outlined the next explanation why a waiver needs to be rejected for CN’s proposal:
1. CN is a a lot bigger railroad than CP.
A mixed CN/KCS would tremendously develop the dimensions of the fifth largest U.S. Class 1 railroad, vastly growing the hole between CN/KCS and the brand new smallest Class 1, which might be CP. A mixed CN/KCS can be greater than three-times the dimensions of CP, whereas the proposed CP/KCS would nonetheless be 13 % smaller than CN (as measured by U.S. working income). (Determine 1)
2. A possible CN/KCS mixture closely overlaps throughout a lot of KCS’ U.S. system, not like a CP/KCS mixture.
A CN/KCS transaction plainly flunks the “end-to-end” take a look at, however CN’s occasional and deceptive assertions that such a transaction can be end-to-end. As defined in CP’s April 27, 2021 letter filed with the STB, financial evaluation of Waybill Pattern information identifies a big variety of origin-destination corridors the place the variety of unbiased rail rivals can be diminished from 2-to-1 or 3-to-2 by the CN/KCS transaction. The verified assertion of economist W. Robert Majure was filed with CP’s submission and explains the screening evaluation that confirmed these impacts and in addition confirmed that CP/KCS is in reality end-to-end.
3. The potential downstream impacts of a CN transaction are materials.
Whereas CP/KCS preserves the fundamental six-carrier construction of the North American rail community (two within the East, two within the West, and two in Canada with routes to the Gulf), the CN/KCS transaction would destabilize that construction. To borrow CN’s personal phrases, not like CP/KCS, the CN/KCS transaction can be a “vital restructuring of the rail business,” and the Board wants the brand new guidelines to deal with the “seemingly strategic responses.”
4. CN’s acquisition premium ought to trigger the STB concern.
The extraordinary premium worth CN is providing to attempt to disrupt CP’s proposed mixture with KCS must concern the STB, because it is not going to solely extinguish the brand new competitors {that a} CP/KCS mixture would carry to CN but additionally require CN to search out methods to recoup these additional prices. All of those penalties would come up instantly upon KCS being positioned into belief as a part of a CN acquisition, and the “public curiosity” customary of the Board’s 2001 guidelines needs to be utilized.
5. CN’s proposal to amass KCS would kill the CP/KCS mixture and all of the procompetitive results that go together with it.
The STB acknowledged in its April 23, 2021 submitting that it was making use of the pre-2001 guidelines to the proposed CP/KCS transaction as a result of that transaction “fall[s] neatly into the Board’s rationale for adopting the waiver within the first occasion.” The choice emphasised the “CP and KCS networks would seem to outcome within the fewest overlapping routes when in comparison with a merger between KCS and some other Class 1 service”. Not like the “end-to-end” CP/KCS transaction – after which the mixed firm would nonetheless be the smallest Class 1 railroad – the CN/KCS proposal raises all the issues that the 2001 guidelines have been adopted to deal with.
6. CN has already dedicated itself to the brand new merger guidelines.
Regardless of CN stating that its merger utility would proceed beneath the present (2001) guidelines for main mergers, CN has additionally implied that its embrace of the 2001 guidelines was solely “voluntar[y]”, maybe suggesting that the STB would lack authority to bind CN to compliance with these guidelines. That’s another excuse to make it official that the waiver doesn’t apply and the brand new guidelines will govern.
A replica of CP’s full submitting is out there here.
For extra data on the CP/KCS transaction and the advantages it’s anticipated to carry to the complete vary of stakeholders, go to FutureForFreight.com.
FORWARD-LOOKING STATEMENTS AND INFORMATION
This information launch consists of sure ahead trying statements and ahead trying data (collectively, FLI). FLI is usually recognized by phrases reminiscent of “anticipate”, “count on”, “challenge”, “estimate”, “forecast”, “plan”, “intend”, “goal”, “consider”, “seemingly” and comparable phrases suggesting future outcomes or statements concerning an outlook. All statements apart from statements of historic reality could also be FLI.
Though we consider that the FLI is affordable based mostly on the knowledge accessible in the present day and processes used to arrange it, such statements usually are not ensures of future efficiency and you might be cautioned in opposition to putting undue reliance on FLI. By its nature, FLI includes a wide range of assumptions, that are based mostly upon components which may be troublesome to foretell and that will contain identified and unknown dangers and uncertainties and different components which can trigger precise outcomes, ranges of exercise and achievements to vary materially from these expressed or implied by these FLI, together with, however not restricted to, the next: the timing and completion of the transaction, together with receipt of regulatory and shareholder approvals and the satisfaction of different situations precedent; interloper threat; the conclusion of anticipated advantages and synergies of the transaction and the timing thereof; the success of integration plans; the main focus of administration time and a spotlight on the transaction and different disruptions arising from the transaction; estimated future dividends; monetary power and suppleness; debt and fairness market situations, together with the flexibility to entry capital markets on beneficial phrases or in any respect; value of debt and fairness capital; the pending share break up of CP’s issued and excellent widespread shares; potential modifications within the CP share worth which can negatively impression the worth of consideration supplied to KCS shareholders; the flexibility of administration of CP, its subsidiaries and associates to execute key priorities, together with these in reference to the transaction; basic Canadian, U.S., Mexican and world social, financial, political, credit score and enterprise situations; dangers related to agricultural manufacturing reminiscent of climate situations and bug populations; the supply and worth of power commodities; the results of competitors and pricing pressures, together with competitors from different rail carriers, trucking firms and maritime shippers in Canada, the U.S. and Mexico; business capability; shifts in market demand; modifications in commodity costs; uncertainty surrounding timing and volumes of commodities being shipped; inflation; geopolitical instability; modifications in legal guidelines, rules and authorities insurance policies, together with regulation of charges; modifications in taxes and tax charges; potential will increase in upkeep and working prices; modifications in gasoline costs; disruption in gasoline provides; uncertainties of investigations, proceedings or different forms of claims and litigation; compliance with environmental rules; labour disputes; modifications in labour prices and labour difficulties; dangers and liabilities arising from derailments; transportation of harmful items; timing of completion of capital and upkeep tasks; foreign money and rate of interest fluctuations; trade charges; results of modifications in market situations and low cost charges on the monetary place of pension plans and investments; commerce restrictions or different modifications to worldwide commerce preparations; the results of present and future multinational commerce agreements on the extent of commerce amongst Canada, the U.S. and Mexico; local weather change and the market and regulatory responses to local weather change; anticipated in-service dates; success of hedging actions; operational efficiency and reliability; buyer, shareholder, regulatory and different stakeholder approvals and help; regulatory and legislative selections and actions; the hostile impression of any termination or revocation by the Mexican authorities of Kansas Metropolis Southern de Mexico, S.A. de C.V.’s Concession; public opinion; numerous occasions that might disrupt operations, together with extreme climate, reminiscent of droughts, floods, avalanches and earthquakes, and cybersecurity assaults, in addition to safety threats and governmental response to them, and technological modifications; acts of terrorism, warfare or different acts of violence or crime or threat of such actions; insurance coverage protection limitations; materials hostile modifications in financial and business situations, together with the supply of brief and long-term financing; and the pandemic created by the outbreak of COVID-19 and ensuing results on financial situations, the demand setting for logistics necessities and power costs, restrictions imposed by public well being authorities or governments, fiscal and financial coverage responses by governments and monetary establishments, and disruptions to world provide chains.
We warning that the foregoing checklist of things is just not exhaustive and is made as of the date hereof. Extra details about these and different assumptions, dangers and uncertainties may be present in studies and filings by CP and KCS with Canadian and U.S. securities regulators, together with any proxy assertion, prospectus, materials change report, administration data round or registration assertion to be filed in reference to the transaction. Because of the interdependencies and correlation of those components, in addition to different components, the impression of anybody assumption, threat or uncertainty on FLI can’t be decided with certainty.
Besides to the extent required by legislation, we assume no obligation to publicly replace or revise any FLI, whether or not because of new data, future occasions or in any other case. All FLI on this webpage is expressly certified in its entirety by these cautionary statements.
ABOUT CANADIAN PACIFIC
Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental railway in Canada and america with direct hyperlinks to main ports on the west and east coasts. CP supplies North American prospects a aggressive rail service with entry to key markets in each nook of the globe. CP is rising with its prospects, providing a collection of freight transportation providers, logistics options and provide chain experience. Go to www.cpr.ca to see the rail benefits of CP. CP-IR
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT
CP will file with the U.S. Securities and Alternate Fee (SEC) a registration assertion on Kind F-4, which is able to embody a proxy assertion of KCS that additionally constitutes a prospectus of CP, and some other paperwork in reference to the transaction. The definitive proxy assertion/prospectus can be despatched to the shareholders of KCS. CP will even file a administration proxy round in reference to the transaction with relevant securities regulators in Canada and the administration proxy round can be despatched to CP shareholders. INVESTORS AND SHAREHOLDERS OF KCS AND CP ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND MANAGEMENT PROXY CIRCULAR, AS APPLICABLE, AND ANY OTHER DOCUMENTS FILED OR TO BE FILED WITH THE SEC OR APPLICABLE SECURITIES REGULATORS IN CANADA IN CONNECTION WITH THE TRANSACTION WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT KCS, CP, THE TRANSACTION AND RELATED MATTERS. The registration assertion and proxy assertion/prospectus and different paperwork filed by CP and KCS with the SEC, when filed, can be accessible freed from cost on the SEC’s web site at www.sec.gov. As well as, traders and shareholders will have the ability to acquire free copies of the registration assertion, proxy assertion/prospectus, administration proxy round and different paperwork which can be filed with the SEC and relevant securities regulators in Canada by CP on-line at investor.cpr.ca and www.sedar.com, upon written request delivered to CP at 7550 Ogden Dale Highway S.E., Calgary, Alberta, T2C 4X9, Consideration: Workplace of the Company Secretary, or by calling CP at 1-403-319-7000, and can have the ability to acquire free copies of the proxy assertion/prospectus and different paperwork filed with the SEC by KCS on-line at www.investors.kcsouthern.com, upon written request delivered to KCS at 427 West twelfth Road, Kansas Metropolis, Missouri 64105, Consideration: Company Secretary, or by calling KCS’s Company Secretary’s Workplace by phone at 1-888-800-3690 or by e-mail at [email protected].
You might also learn and duplicate any studies, statements and different data filed by KCS and CP with the SEC on the SEC public reference room at 100 F Road N.E., Room 1580, Washington, D.C. 20549. Please name the SEC at 1-800-732-0330 or go to the SEC’s web site for additional data on its public reference room. This communication shall not represent a proposal to promote or the solicitation of a proposal to purchase any securities, nor shall there be any sale of securities in any jurisdiction wherein such provide, solicitation or sale can be illegal previous to acceptable registration or qualification beneath the securities legal guidelines of such jurisdiction. No providing of securities shall be made besides by way of a prospectus assembly the necessities of Part 10 of the U.S. Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION OF PROXIES
This communication is just not a solicitation of proxies in reference to the transaction. Nevertheless, beneath SEC guidelines, CP, KCS, and sure of their respective administrators and government officers could also be deemed to be members within the solicitation of proxies in reference to the transaction. Details about CP’s administrators and government officers could also be present in its 2021 Administration Proxy Round, dated March 10, 2021, in addition to its 2020 Annual Report on Kind 10-Ok filed with the SEC and relevant securities regulators in Canada on February 18, 2021, accessible on its web site at investor.cpr.ca and at www.sedar.com and www.sec.gov. Details about KCS’s administrators and government officers could also be discovered on its web site at www.kcsouthern.com and in its 2020 Annual Report on Kind 10-Ok filed with the SEC on January 29, 2021, accessible at www.sec.gov and www.investors.kcsouthern.com. These paperwork may be obtained freed from cost from the sources indicated above. Extra data concerning the pursuits of such potential members within the solicitation of proxies in reference to the transaction can be included within the proxy assertion/prospectus and administration proxy round and different related supplies filed with the SEC and relevant securities regulators in Canada after they turn out to be accessible.
SOURCE Canadian Pacific
