Over 110 Letters Filed with the Surface
Transportation Board Express Concern About the CN Proposal
CP-KCS seen as the only combination that
serves the public interest
CALGARY, AB, May 3, 2021 /CNW/ - Canadian Pacific Railway
Limited (TSX: CP) (NYSE: CP) announced today that more than
110 customers and other stakeholders have filed letters with the
Surface Transportation Board ("STB") to express concerns about
and/or opposition to Canadian National's ("CN") unsolicited
proposal for Kansas City Southern ("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.
The letters were filed with the STB by stakeholders large and
small across the North American transportation supply chain, and
include North Dakota Grain Dealers Association, US Development
Group, Farmers Cooperative of Hanska and the Premier of
New Brunswick.
Notable excerpts from the letters include:
- "The backbone of North
Dakota's economy is agriculture and over 80% of North Dakota's grain moves to market by rail.
North Dakota grain shippers are in
a captive rail market which limits competition and our options for
market destinations. A CP-KCS combination should provide CP grain
shippers expanded access to markets across the United States, Mexico, Canada, and even internationally. The bid by
CN would effectively end any opportunity for market expansion for
North Dakota CP grain shippers." – North Dakota Grain Dealers
Association
- "A CN-KCS combination would do nothing to benefit Farmers Coop
of Hanska and our U.S. Upper Plains grain shipping facilities but
would instead decrease competition overall." – Farmers Cooperative
of Hanska
- "[W]e have no indication of CN's receptivity to potential
expansion into markets desired by our current and future customers
both in Mexico and North America. We believe a CN-KCS merger
would provide inferior service options. From our perspective the
only combination involving KCS that is in the public interest is
the one that CP has proposed." – US Development Group
- "I urge the U.S. Surface Transportation Board to reject CN's
request for a voting trust structure and reject any waiver from a
full public interest review for CN's voting trust proposal. On the
other hand, since CP's proposed acquisition of KCS raises none of
the same competition concerns and would in fact enhance competition
and further level the playing field for rail shippers in
North America, the Board should
approve its proposed voting trust." – Blaine M. Higgs, Premier of New Brunswick
To date, CP has received almost 500 letters that have expressed
support for the CP-KCS transaction, many of which request the STB
to review the transaction as swiftly as possible so the
end-to-end network could be integrated for the benefits
of all stakeholders and North American economic growth.
In its April 23 decision to
review the CP-KCS transaction under the pre-2001 merger rules, the
STB noted that a CP-KCS combination would "result in the fewest
overlapping routes when compared to a merger between KCS and any
other Class I carrier" and "if approved, the combination of CP and
KCS, the sixth largest and seventh largest Class I railroads,
respectively, would still result in the smallest Class I railroad,
based on U.S. operating revenues. (…) In sum, the Transaction
appears to fall neatly into the Board's rationale for adopting the
waiver in the first instance." CP strongly believes that the CP-KCS
combination is the only one in the public interest and that the STB
will evaluate the negative public interest consequences of a CN-KCS
transaction.
The STB's decision is an important step for the regulatory
approval of the CP-KCS combination, which was announced on
March 21, 2021, and remains subject
to the STB review as well as the approvals of CP and KCS
shareholders and other customary closing conditions. The STB
review is expected to be completed by the middle of
2022.
For more information on the transaction and the benefits it is
expected to bring to the full range of stakeholders,
visit FutureForFreight.com.
FORWARD-LOOKING STATEMENTS AND INFORMATION
This news release includes certain forward looking statements
and forward looking information (collectively, FLI). FLI is
typically identified by words such as "anticipate", "expect",
"project", "estimate", "forecast", "plan", "intend", "target",
"believe", "likely" and similar words suggesting future outcomes or
statements regarding an outlook. All statements other than
statements of historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its nature, FLI
involves a variety of assumptions, which are based upon factors
that may be difficult to predict and that may involve known and
unknown risks and uncertainties and other factors which may cause
actual results, levels of activity and achievements to differ
materially from those expressed or implied by these FLI, including,
but not limited to, the following: the timing and completion of the
transaction, including receipt of regulatory and shareholder
approvals and the satisfaction of other conditions precedent;
interloper risk; the realization of anticipated benefits and
synergies of the transaction and the timing thereof; the
success of integration plans; the focus of management time and
attention on the transaction and other disruptions arising from the
transaction; estimated future dividends; financial strength and
flexibility; debt and equity market conditions, including
the ability to access capital markets on favourable terms or at
all; cost of debt and equity capital; the pending share
split of CP's issued and outstanding common shares; potential
changes in the CP share price which may negatively impact the
value of consideration offered to KCS shareholders; the ability of
management of CP, its subsidiaries and affiliates to execute key
priorities, including those in connection with the transaction;
general Canadian, U.S., Mexican and global social, economic,
political, credit and business conditions; risks associated with
agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities; the
effects of competition and pricing pressures, including competition
from other rail carriers, trucking companies and maritime shippers
in Canada, the U.S. and
Mexico; industry capacity; shifts
in market demand; changes in commodity prices; uncertainty
surrounding timing and volumes of commodities being shipped;
inflation; geopolitical instability; changes in laws, regulations
and government policies, including regulation of rates; changes in
taxes and tax rates; potential increases in maintenance and
operating costs; changes in fuel prices; disruption in fuel
supplies; uncertainties of investigations, proceedings or other
types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; currency and interest rate fluctuations;
exchange rates; effects of changes in market conditions and
discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; the effects of current and future multinational
trade agreements on the level of trade among Canada, the U.S. and Mexico; climate change and the market and
regulatory responses to climate change; anticipated in-service
dates; success of hedging activities; operational performance and
reliability; customer, shareholder, regulatory and other
stakeholder approvals and support; regulatory and legislative
decisions and actions; the adverse impact of any termination or
revocation by the Mexican government of Kansas City Southern de
Mexico, S.A. de C.V.'s Concession;
public opinion; various events that could disrupt operations,
including severe weather, such as droughts, floods, avalanches and
earthquakes, and cybersecurity attacks, as well as security threats
and governmental response to them, and technological changes; acts
of terrorism, war or other acts of violence or crime or risk of
such activities; insurance coverage limitations; material adverse
changes in economic and industry conditions, including the
availability of short and long-term financing; and the pandemic
created by the outbreak of COVID-19 and resulting effects on
economic conditions, the demand environment for logistics
requirements and energy prices, restrictions imposed by public
health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be found
in reports and filings by CP and KCS with Canadian and U.S.
securities regulators, including any proxy statement, prospectus,
material change report, management information circular or
registration statement to be filed in connection with the
transaction. Due to the interdependencies and correlation of these
factors, as well as other factors, the impact of any one
assumption, risk or uncertainty on FLI cannot be determined with
certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
ABOUT CANADIAN PACIFIC
Canadian Pacific is a transcontinental railway in Canada and the
United States with direct links to major ports on the west
and east coasts. CP provides North American customers a competitive
rail service with access to key markets in every corner of the
globe. CP is growing with its customers, offering a suite of
freight transportation services, logistics solutions and supply
chain expertise. Visit www.cpr.ca to see the rail advantages of CP.
CP-IR
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND
IT
CP will file with the U.S. Securities and Exchange Commission
(SEC) a registration statement on Form F-4, which will include a
proxy statement of KCS that also constitutes a prospectus of CP,
and any other documents in connection with the transaction. The
definitive proxy statement/prospectus will be sent to the
shareholders of KCS. CP will also file a management proxy circular
in connection with the transaction with applicable securities
regulators in Canada and the
management proxy circular will be sent 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 statement and proxy statement/prospectus and
other documents filed by CP and KCS with the SEC, when filed,
will be available free of charge at the SEC's website at
www.sec.gov. In addition, investors and shareholders will be able
to obtain free copies of the registration statement, proxy
statement/prospectus, management proxy circular and other documents
which will be filed with the SEC and applicable securities
regulators in Canada by CP online
at investor.cpr.ca and www.sedar.com, upon written
request delivered to CP at 7550 Ogden Dale Road S.E., Calgary, Alberta, T2C 4X9, Attention: Office
of the Corporate Secretary, or by calling CP at 1-403- 319-7000,
and will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC by KCS
online at www.investors.kcsouthern.com, upon written request
delivered to KCS at 427 West 12th Street, Kansas City, Missouri 64105, Attention:
Corporate Secretary, or by calling KCS's Corporate Secretary's
Office by telephone at 1-888-800- 3690 or by email
at corpsec@kcsouthern.com.
You may also read and copy any reports, statements and other
information filed by KCS and CP with the SEC at the SEC public
reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at
1-800-732-0330 or visit the SEC's website for further
information on its public reference room. This communication shall
not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to appropriate registration or
qualification under the securities laws of such jurisdiction. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION OF PROXIES
This communication is not a solicitation of proxies in
connection with the transaction. However, under SEC rules, CP, KCS,
and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies in
connection with the transaction. Information about CP's
directors and executive officers may be found in its
2021 Management Proxy Circular, dated March 10, 2021, as well as its 2020 Annual Report
on Form 10-K filed with the SEC and applicable securities
regulators in Canada on
February 18, 2021, available on its
website at investor.cpr.ca and at www.sedar.com and
www.sec.gov. Information about KCS's directors and executive
officers may be found on its website atwww.kcsouthern.com and in
its 2020 Annual Report on Form 10-K filed with the SEC on
January 29, 2021, available at
www.investors.kcsouthern.com and www.sec.gov. These documents can
be obtained free of charge from the sources indicated above.
Additional information regarding the interests of such potential
participants in the solicitation of proxies in connection with the
transaction will be included in the proxy statement/prospectus and
management proxy circular and other relevant materials filed with
the SEC and applicable securities regulators in Canada when they become available.
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SOURCE Canadian Pacific