AUGUST 17, 2021 / 4:00PM, KSU.N - Kansas City Southern and Canadian National Railway Co at Deutsche Bank
Virtual Transportation Conference
One is support for the CN-KCS combination, but also support for doing
a transaction, a rail transaction under the new rule. And there hasnt been a transaction a long time. And I think those who are have a voice in the rail transaction also support very much that this transaction should take place under
the new rule, which is a quite significant difference than under the old rules.
Looking forward to a positive response from the STB on our bonding trust.
The STB has said that they expect to have a decision by August 31, and were looking very much forward to that. So Pat?
Patrick J. Ottensmeyer - Kansas City
Southern - CEO, President & Director
Okay. Thanks, JJ. Thanks, Amit, and welcome, everyone. I just want to make a couple of
comments on this slide before we move on, and that is, as many of you know, we, KCS, has a shareholders meeting scheduled for Thursday, August 19. We are moving forward with that shareholders meeting. You probably saw our announcement
last week.
Actually 2 elements that I think are worth highlighting. One is that our Board, as JJ mentioned, unanimously determined that the most recent
proposal from CP was not superior to the CN offer that we have in front of us. And that the Board also deemed that it was unlikely to develop into a superior offer. We are totally focused on moving forward with the CN vote and transaction.
We also announced in response to the STBs self-imposed deadline of August 31, that in the event that we do not have a decision from the STB by this
evening, by close of business this evening, I think at 7 p.m. Eastern Time, 6 p.m. Central Time, we will immediately adjourn the meeting on the 19th, Thursday. And at that time, we will announce the new meeting date. But if we do not have a decision
from the STB, we think that is a very important information for shareholders. Were not going to ask shareholders to make a commitment without having that information, we will adjourn, and we will reconvene at a time that we will announce on
Thursday and after we have a decision from the STB on the voting trust. JJ, back to you.
Jean-Jacques Ruest - Canadian National
Railway Company - President, CEO & Director
Lets go to Page 5. We just want to reiterate some of the key elements of the
CN proposal. So its $325 per share, $200 of cash and 1.129 CN shares for each KCS shares that gives opportunity to KCS shareholders participate in the long-term upside. Its $25 more than the CP latest offer. So it is a full
$2.2 billion of value. So it is significant.
The combined entity will establish a premier kind of U.S.-Mexico railway, which is, by the way, a much
needed new North-South supply chain network that really needs to put in place, to really max to make full use of the recently reviewed and re-signed USMCA. Quite significant synergies of
$1 billion-plus, mainly driven by ESG positive conversion truck to rail. As time goes on during the course of the summer and doing more home work, were even more confident about the synergies that we have first worked out in early April,
when we made the offer early days.
We believe we have a low execution risk. We have fully committed financing for a transaction, and we have a plain
vanilla trust, the same way as CP has. I think it does what it does, it should work very well, and we have a good track record in M&A acquisition at CN. We bought, over the years, big and small railroad and one of the ones that people know
probably the best is the Illinois Central. And just as a reminder, we dont need a CN shareholders vote for to complete the transaction.
If
we go to the next page, Page 6, which is highly strategic. This new network will probably be one of the most compelling network around the rail industry, extending all the way from Mexico City, all the way north to Montreal, Toronto and West
Vancouver and Calgary. We will really exploit, be in a good position to exploit world trade from all 3 coasts to any part of the hinterland in North America, but also we will compete and compete real hard and provide customers choices for long-haul
intermodal between the 3 countries. Therefore, as I said earlier, we have a high conviction on our synergies as much the cost and the revenue. And on the revenue, the synergies in both carload, merchandise, bulk, selective bulk commodities as well
as intermodal, when its conversion from the highway or diversion from other railroad. And all of this should be very accretive to the CN and KCS shareholders.
3
|
|
|
REFINITIV STREETEVENTS | www.refinitiv.com
| Contact Us
©2021 Refinitiv. All rights reserved. Republication or redistribution of Refinitiv content, including by framing or similar means, is prohibited without
the prior written consent of Refinitiv. Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
|
|
|