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Kansas City Southern terminates merger deal with Canadian National Railway and strikes new deal with Canadian Pacific

Kansas City Southern said Wednesday it is terminating its merger agreement with Canadian National Railway Co. and entering a merger agreement with Canadian Pacific Railway Ltd. , after determining that it’s $31 billion bid was the best of the two competing offers. Under the terms of the new agreement, KCS shareholders will receive $90 in cash and 2.884 shares of CP common stock for each share owned. Holders of the company’s preferred stock will receive $37.50 in cash for each share owned. KCS will pay Canadian National a breakup fee of $700 million, and an extra $700 million to cover a sum paid by Canadian National to reimburse KCS a termination fee paid to CP in May. “Both of these payments will be reimbursed to KCS by CP,” the company said in a statement. The company will schedule a special shareholder meeting to fove on the new deal in due course, said the statement. KCS shares were up 0.5% premarket and have gained 37% in the year to date, while the S&P 500 has gained 18%. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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