CN Proposal Deemed Superior by Kansas City Southern

CN’s enhanced proposal of $325¹ per share values KCS at an enterprise value of $33.6 billion

With Confirmatory Due Diligence Complete, CN Looks Forward to Promptly Entering into Merger Agreement with KCS

MONTREAL, May 13, 2021 (GLOBE NEWSWIRE) -- CN (TSX: CNR, NYSE: CNI) today announced that following the completion of confirmatory due diligence, it submitted an enhanced binding superior proposal and merger agreement to the Kansas City Southern (NYSE: KSU) (“KCS”) Board of Directors. The KCS Board has determined CN’s proposal to be a “Company Superior Proposal” and has announced its intention to terminate the previously executed March 21, 2021 merger agreement with Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (“CP”). CN looks forward to promptly entering into a definitive merger agreement with KCS to create the premier railway for the 21^st century.

CN’s proposal offers KCS shareholders $325 per common share based on yesterday’s closing price of CN shares, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. Under the terms of CN’s revised proposal, 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. This represents an implied premium of 45% when compared to KCS’ unaffected closing stock price on March 19, 2021. KCS’ preferred shareholders will continue to receive $37.50 in cash for each preferred share. Under the terms of the revised proposal, a wholly owned subsidiary of CN has also agreed to reimburse $700 million to KCS in connection with their payment of the termination fee to CP under the merger agreement with CP.

“We are delighted that KCS has deemed CN’s 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. 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. Together, CN and KCS will seamlessly connect ports and rails in the United States, Mexico and Canada by providing superior service, enhanced competition and new market access to move goods across North America safely and efficiently. We are encouraged by the widespread support we have received for the transaction thus far and will continue to work closely with KCS and all relevant stakeholders to fully realize the benefits and opportunities available through a combined CN-KCS.”