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Canadian National Railway Co CNI

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Following Regulator's Rejection of CN’s Voting Trust, KCS' Board Deems CP’s Proposal Superior

Matthew Young, CFA Equity Analyst

Analyst Note

| Matthew Young, CFA |

As we highlighted in late August, the Surface Transportation Board rejected Canadian National’s proposed independent voting trust, which was to be the first step in a CN-Kansas City Southern tie-up. As a result, KCS has re-engaged Canadian Pacific’s still-valid offer to purchase KCS at around $300 per share, likely because a CP deal has a much greater chance of STB approval--CP has less network overlap with KCS, and CP's proposed voting trust already has STB approval. On Sept. 12, KCS’ board deemed CP’s proposal to be “superior” and is poised to accept it after a five-day period (end of day Sept. 15), during which CN has the opportunity to respond with a better offer.

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Company Profile

Business Description

Canadian National's railway spans Canada from coast to coast and extends through Chicago to the Gulf of Mexico. In 2019, CN delivered almost 6 million carloads over its 19,600 miles of track. CN generated roughly CAD 14 billion in total revenue by hauling intermodal containers (25% of consolidated revenue), petroleum and chemicals (21%), grain and fertilizers (16%), forest products (12%), metals and mining (11%), automotive shipments (6%), and coal (4%). Other items constitute the remaining revenue.

Contact
935 de La Gauchetiere Street West
Montreal, QC, H3B 2M9, Canada
T +1 514 399-7091
Sector Industrials
Industry Railroads
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type —
Employees 24,376

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