Canadian National Railway Company (TSX:CNR) (“CN”) made a proposal to acquire Kansas City Southern (NYSE:KSU) (“KCS”) from The Vanguard Group, Inc., MFS Investment Management, Inc., BlackRock, Inc. (NYSE:BLK) and others for $29.6 billion on April 20, 2021. Canadian National Railway Company entered into definitive agreement to acquire Kansas City Southern on May 21, 2021. Under the terms of the transaction, KCS shareholders will receive $200 in cash and 1.059 shares of CN common stock for each KCS common share. KCS' preferred shareholders will continue to receive $37.50 in cash for each preferred share. KCS shareholders expected to own 12% of the combined company. As of May 13, 2021, CN made a 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 12.65% of the combined company. KCS' preferred shareholders will continue to receive $37.50 in cash for each preferred share. The revised proposal is deemed superior and CN Looks Forward to Promptly Entering into Merger Agreement with KCS. The cash portion of the consideration will be funded through a combination of cash-on hand and approximately $19.3 billion of new debt from J.P. Morgan and RBC Capital Markets. As of June 2, 2021, the cash portion of the purchase price will also be funded from a term loan of $5 billion. Kansas City Southern will be required to make a payment to Canadian National equal to $700 million in case of termination of the transaction and Canadian National will be required to make a payment to Kansas City Southern equal to $1 billion in case of termination under certain circumstances. CN will maintain corporate headquarters in Montreal, Canada and will continue operating KCS business in the United States and Mexico under the Kansas City Southern name and establish Kansas City as the headquarters of combined company's U.S. operations.

KCS directors are expected to join CN Board of Directors at the appropriate time. The transaction is subject to regulatory approvals such as railroad regulatory approval condition that is relevant to the KCS shareholders is approval of the voting trust, Canadian National's registration statement on Form F-4 having been declared effective by the Securities and Exchange Commission, approval by the Comisión Federal de Competencia Económica (COFECE) (the Mexican Antitrust Commission ) and the Instituto Federal de Telecomunicaciones (the Mexican Federal Telecommunications Institute), the Canadian National common shares issuable in the Merger having been approved for listing on the New York Stock Exchange and the Toronto Stock Exchange, and CN is proposing to use the identical voting trust that CP has proposed. CP is seeking approval from the Surface Transportation Board (“STB”) for the combination, which also remains subject to the approvals of CP and KCS shareholders and other customary closing conditions. The transaction is not subject to any financing contingencies and will not require the approval of CN's shareholders. As of April 21, 2021, CN announced that it has submitted to the Surface Transportation Board (“STB”) a prefiling notification of its intent to file an application seeking authority to combine with Kansas City Southern. CN Board of Directors has unanimously approved the proposal. As of April 22, 2021, STB review is expected to be completed in the second half of 2021. As of April 24, 2021, KCS's Board of Directors has unanimously determined that the unsolicited proposal received from Canadian National Railway could reasonably be expected to lead to a “Company Superior Proposal”. As of May 13, 2021, the KCS board has determined CN's proposal to be a “Company Superior Proposal”. As of May 26, 2021, CN and KCS jointly filed with the STB a renewed motion for approval of its voting trust that outlines the case for approval of the voting trust. As part of the application, CN is committing to divest KCS' 70-mile line between New Orleans and Baton Rouge. The board of directors of KCS unanimously recommends that KCS stockholders vote “FOR” each of the KCS proposals. As of July 26, 2021, Chair of the House Committee on Transportation and Infrastructure Peter DeFazio sent a letter to the Surface Transportation Board opposing the approval of a trust for the proposed merger of the Canadian National and Kansas City Southern railroads. On August 10, 2021, Canadian Pacific Railway Limited (TSX:CP) submitted a proposal to acquire Kansas City Southern for $27.4 billion. As of August 12, 2021, The KCS Board reaffirms its recommendation to KCS shareholders to vote in favor of the merger with CN. KCS has scheduled Meeting of Stockholders on August 19, 2021. Kansas City Southern decided to delay shareholder vote and the vote scheduled for August 19, 2021 was put on hold while investors wait to hear whether the STB will approve Canadian National's plan to use a voting trust as part of the acquisition. On August 31, 2021, STB refused CN-KCS joint motion for voting trust approval. KCS has delayed the shareholder meeting until September 3, 2021. On September 12, 2021, KCS Board of Directors has deemed the CP proposal as “Company Superior Proposal.” KCS has notified that it intends to terminate merger agreement with CN and enter into the definitive agreement with CP. Under the terms of the CN-KCS merger agreement, CN has five business days to negotiate amendments to the agreement

The transaction is expected to close at end of 2021. As of May 21, 2021, the transaction is expected to take place in the second half of 2022. The transaction is expected to be accretive to CN's adjusted diluted earnings per share in the first full year following CN assuming control of KCS. J.P. Morgan and RBC Capital Markets are acting as financial advisors to CN. Centerview Partners LLC is also serving as a financial advisor to CN. Robert I. Townsend III, Damien R. Zoubek, Jenny Hochenberg, Craig F. Arcella, Stephen M. Kessing, Sarah F. Rosen, Lauren Angelilli, Jonathan J. Katz and Matthew J. Bobby, Christine A. Varney and Evan S. Gabor of Cravath, Swaine & Moore LLP, Sidley Austin LLP, Stephen J. Kelly of Norton Rose Fulbright Canada LLP, Torys LLP, Agon and Stikeman Elliot LLP are providing legal counsel to CN. Steve Seidman and Laura Delanoy of Willkie Farr & Gallagher LLP represented BofA Securities in the transaction. BofA Securities and Morgan Stanley & Co. LLC are serving as financial advisors to Kansas City Southern. Steven A. Rosenblum and Elina Tetelbaum of Wachtell, Lipton, Rosen & Katz, Baker & Miller PLLC, Davies Ward Phillips & Vineberg LLP, WilmerHale, and White & Case, S.C. are serving as legal counsel to Kansas City Southern. MacKenzie Partners, Inc acted as the information agent to Kansas City Southern and will receive a fee of $175,000 for its services. Kansas City has agreed to pay Morgan Stanley approximately $70 million, $5 million of which was paid upon the execution of the merger agreement and delivery of its opinion in connection with the acquisition, $2.5 million of which was paid upon delivery by Morgan Stanley of its opinion in connection with the merger and the remainder of which is due upon the closing of the merger. Kansas City has also agreed to pay BofA Securities approximately $70 million, $5 million of which was paid delivery of its opinion in connection with the acquisition, $2.5 million of which was paid upon delivery by BofA Securities of its opinion in connection with the merger and the remainder of which is due upon the closing of the merger.

Canadian National Railway Company (TSX:CNR) (“CN”) cancelled the acquisition of Kansas City Southern (NYSE:KSU) (“KCS”) from The Vanguard Group, Inc., MFS Investment Management, Inc., BlackRock, Inc. (NYSE:BLK) and others on September 15, 2021. In connection with KCS termination of the CN merger agreement, KCS will pay CN the $700 million cash “Company Termination Fee” as well as the $700 million cash “CP Termination Fee Refund” provided for in the CN merger agreement. CN will receive $1.4 billion in termination fees.