Second Proxy Advisor to Call on KCS
Stockholders to Adjourn Stockholder Meeting; Provides Detailed
Analysis Including That Some Investors May See Merger Proposals as
"Equal at this Juncture"
CALGARY, AB, Aug. 13, 2021 /PRNewswire/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) ("CP") today welcomed proxy
advisor Glass Lewis & Co. LLC's (Glass Lewis) recommendation
that Kansas City Southern ("KCS") stockholders "ABSTAIN" from
voting to adopt the proposed merger agreement between KCS and
Canadian National Railway Company ("CN"). Glass Lewis also noted
that with CP's revised offer, investors may see the CN-KCS and
CP-KCS proposals as "effectively equal at this juncture."
In its recommendation issued Friday, Glass Lewis said
that "KCS shareholder interests would be best served by
withholding approval of the CN transaction and instead voting to
adjourn the special meeting. In our view, there is little, if any,
reason for KCS shareholders to cast a binding vote on the CN
transaction at this juncture, in the face of significant and
unnecessary uncertainty that could potentially have substantial
ramifications for KCS shareholders going forward, especially when
much of the uncertainty should be cleared up in the coming
days."
Describing the two merger proposals, Glass Lewis noted the
"difference between the two offers has narrowed" and said "some
investors may consider the CP offer currently has materially
greater certainty with respect to regulatory approval, and they may
reasonably be of the view that the probability/risk-adjusted values
of the CN transaction and current CP proposal are effectively equal
at this juncture."
Glass Lewis issued its recommendation after the KCS Board of
Directors rightly announced yesterday a decision to adjourn the
August 19 stockholder meeting absent
a decision from the STB to "give all shareholders and the Board
time to receive and consider the STB decision." The Glass Lewis
recommendation follows a similar move Thursday by Institutional
Shareholder Services Inc., another proxy advisor, and comes two
days after CP announced its August 10
proposal to acquire KCS, which provides a compelling, achievable
alternative to KCS shareholders.
Glass Lewis noted that "CN and KCS have to date not obtained
such approval for the voting trust, now nearly 12 weeks after the
announcement of the CN-KCS merger agreement. Meanwhile, CP obtained
voting trust approval from the STB for the now terminated CP-KCS
transaction on May 6, 2021, less than
seven weeks after the announcement of the original CP-KCS
agreement." The proxy advisor states that unless proven
otherwise they are "more inclined to believe the position
articulated by CP regarding the likelihood of STB approval of the
CN transaction better reflects the facts and available evidence
known at this time than does the seemingly overly-confident view
espoused by CN and KCS in support of their deal."
The revised ISS recommendations and today's Glass Lewis
recommendation validate CP's long-standing belief that KCS
stockholders should have all relevant information, including the
STB decision on the CN voting trust, to be able to make an informed
decision, avoid being locked into the CN-KCS deal and
preserve the ability to consider a better alternative proposal.
CP has filed a proxy statement asking stockholders to vote
"AGAINST" the proposed CN-KCS combination at the August 19 KCS stockholders meeting so that KCS
stockholders are not locked into the CN-KCS deal and unable to
consider other, better, options. That includes CP's revised
superior offer submitted to KCS on August
10, which we stand by. A vote to "ABSTAIN" and vote
"AGAINST" are essentially the same since they both withhold
approval of the CN merger proposal.
We have urged the STB not to approve CN's proposed use of a
voting trust because we believe that it would be anti-competitive
and not in the public interest.
We believe that once the STB rules on the CN voting trust, the
August 10 CP offer will be deemed
superior as the CP-KCS combination has regulatory certainty with
the STB approval for the use of a voting trust.
CP-KCS: The only viable Class 1 combination
A CP-KCS
combination would be a positive step toward more competition – not
less – in the freight rail industry and would be better for Amtrak.
It brings more competition among railways and protects obligations
to passenger service.
For information on the benefits of a CP-KCS combination, 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: changes in business
strategies and strategic opportunities; estimated future dividends;
financial strength and flexibility; debt and equity market
conditions, including the ability to access capital markets on
favorable terms or at all; cost of debt and equity capital;
potential changes in the CP share price; the ability of management
of CP, its subsidiaries and affiliates to execute key priorities;
general North American 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 and the U.S.; North
American and global economic growth; industry capacity; shifts in
market demand; changes in commodity prices and commodity demand;
uncertainty surrounding timing and volumes of commodities being
shipped via CP; 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; sufficiency of CP's budgeted capital
expenditures in carrying out CP's business plan; services and
infrastructure; the satisfaction by third parties of their
obligations to CP; 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 and the U.S.; climate change and the
market and regulatory responses to climate change; anticipated
in-service dates; success of hedging activities; operational
performance and reliability; regulatory and legislative decisions
and actions; 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; and the pandemic created by the outbreak of COVID-19
and resulting effects on CP's business, operating results, cash
flows and/or financial condition, as well as 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 with Canadian and U.S.
securities regulators. Reference should be made to "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Statements" in CP's
annual and interim reports on Form 10-K and 10-Q. 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.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
CP has
filed a definitive proxy statement with the Securities and Exchange
Commission ("SEC") to be used to solicit votes of the stockholders
of KCS against the proposal to adopt the CN Agreement.
Additionally, in furtherance of CP's proposed transaction with KCS
and subject to future developments, CP (and, if a negotiated
transaction is agreed, KCS) may file one or more proxy statements,
registration statements, prospectuses or other documents with the
SEC or applicable securities regulators in Canada. This news
release is not a substitute for any proxy statement, registration
statement, prospectus or other document CP and/or KCS may file with
the SEC or applicable securities regulators in Canada in connection with the proposed
transaction.
INVESTORS AND STOCKOLDERS OF KCS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT, ALONG WITH ANY FUTURE PROXY
STATEMENT(S) AND OTHER PROXY MATERIALS, REGISTRATION STATEMENT(S),
PROSPECTUS(ES) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
OR APPLICABLE SECURITIES REGULATORS IN CANADA CAREFULLY IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KCS, CP, THE TRANSACTIONS CONTEMPLATED BY THE CN
MERGER AGREEMENT, CP'S PROPOSED TRANSACTION WITH KCS AND RELATED
MATTERS AND DEVELOPMENTS. THE DEFINITIVE PROXY STATEMENT
ALSO INCLUDES INFORMATION ABOUT THE IDENTITY OF THE PARTICIPANTS IN
CP'S PROXY SOLICITATION AND A DESCRIPTION OF THEIR DIRECT OR
INDIRECT INTERESTS THEREIN.
THE DEFINITIVE PROXY STATEMENT AND OTHER MATERIALS FILED WITH
THE SEC ARE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
WWW.SEC.GOV. IN ADDITION, INVESTORS AND STOCKHOLDERS MAY
OBTAIN FREE COPIES OF THE DEFINITIVE PROXY STATEMENT AND OTHER
MATERIALS FILED WITH THE SEC ONLINE AT INVESTOR.CPR.CA, OR UPON
REQUEST TO CP'S PROXY SOLICITOR, INNISFREE M&A INCORPORATED, AT (212)
750-5833 OR TOLL-FREE AT (877) 456-3442.
NO OFFER OR SOLICITATION
This news release 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.
ABOUT CANADIAN PACIFIC
Canadian Pacific
(TSX: CP) (NYSE: CP) 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
View original
content:https://www.prnewswire.com/news-releases/cp-welcomes-glass-lewis-call-for-kcs-stockholders-to-abstain-from-voting-to-approve-cn-kcs-merger-proposal-301355114.html
SOURCE Canadian Pacific