CALGARY —
Canadian Pacific Railway Ltd. has sweetened its takeover offer for Kansas City Southern with a US$31 billion bid for the U.S. railway.
The new bid comes ahead of a vote on Aug. 19 by Kansas City Southern shareholders on a rival offer by Canadian National Railway Co. valued at US$33.6 billion. Both deals include the assumption of about US$3.8 billion in Kansas City Southern’s debt.
However, CP Rail said it believes its offer is more likely to be approved by U.S. regulators.
CP’s offer “represents improved terms to those agreed to in the CP-KCS merger agreement entered into on March 21, 2021 that are substantially similar to those in the CN merger agreement, but offers significantly higher regulatory certainty,” CP Rail CEO Keith Creel wrote in a letter to the KCS board.
CP has argued that CN has too much overlap on routes with KCS so a tie-up between the two would reduce competition, making regulator approval unlikely. The CP bid, Creel noted, will also be evaluated under pre-2001 merger rules while the CN bid is being judged by more stringent rules passed that year.
A recent executive order by U.S. President Joe Biden promoting competition also makes the CN bid less like to be approved, Creel said.
CN maintains that it could increase competition by taking over KCS, and has committed to selling a roughly 113-kilometre stretch of rail where the two companies’ networks run parallel.
The company said in a statement Tuesday that its offer remains the better one.
“CN and KCS’ agreed transaction remains superior and the best option for both companies’ stakeholders to deliver on a combination that will enhance competition and provide new servicing options for customers.”
On Friday, proxy advisory firm Institutional Shareholder Services recommended KCS shareholders vote for CN’s offer, noting that “the premium, valuation, and strategic rationale for the transaction are compelling.”
The proxy firm also noted that CP hadn’t presented a worthy alternative.
“While CP is soliciting votes against the transaction, it has not provided KSU shareholders with any actionable alternative, let alone one that bridges the divide between its initial offer and (CN’s) offer.”
Desjardins analyst Benoit Poirier said in a note that he believes this comment may have encouraged CP to make its new offer, which remains manageable for the company.
“Overall, our preliminary analysis gives us confidence that raising its offer would be doable for CP without jeopardizing its financial position,” Poirier wrote.
“This would also solidify CP’s proposition to KCS’s shareholders in a hostile environment for large-scale M&A in the industry following president Biden’s recent executive order on competition.”
Creel said in his letter that CP had held off on a revised bid because the company did not want to engage in a bidding war, but that the approaching KCS shareholder vote prompted the higher offer.
“We believe that now is the right time for us to re-engage with KCS, as the regulatory uncertainty of the proposed CN merger has placed KCS stockholders in the unfortunate position of having to vote on the proposed CN merger and, as a consequence of approving such proposal, eliminate KCS’s ability to consider superior offers.”
CN is awaiting a decision by the U.S. Surface Transportation Board on the railway’s plan to set up a voting trust that would acquire KCS and hold the company during the regulator’s potentially lengthy review of the overall deal.
The STB has already approved CP Rail’s use of a voting trust.
CP Rail had signed a deal in March to buy KCS for about US$275 per share, but CN topped that offer and secured support from the KCS board for its proposal in May.
Under CP Rail’s new offer, KCS shareholders would receive 2.884 CP Rail shares and US$90 in cash for each common share held, representing a value of about US$300 per share.
The CN proposal would see KCS shareholders receive US$200 in cash and 1.129 CN shares for each share in an offer valued at about US$325 per share.
This report by The Canadian Press was first published on Aug. 10, 2021
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
