KCS amends Mexican rail acquisition deal
Dec 16, 2004 9:19 AM, from staff and wire reports
Kansas City Southern (KCS) and Grupo TMM SA have entered into an amended acquisition agreement whereby TMM will sell its 51% voting interest in Grupo Transportacion Ferroviaria Mexicana SA de CV (TFM) to KCS for $200 million in cash, 18 million shares of KCS common stock, $47 million in a two-year promissory note, and up to $110 million payable in cash and KCS common stock.
The $47 million promissory note and part of the $110 million contingent payment will be subject to escrow arrangements to cover potential indemnification claims. The boards of directors of both companies have approved the transaction.
KCS will also enter into a three-year consulting contract with a consulting firm controlled by Jose Serrano Segovia. KCS and TMM have also agreed that upon completion of the transaction all litigation between the two companies will be dismissed.
Completion of the transaction remains subject to certain conditions, including KCS shareholder approval. TMMís controlling shareholders have entered into a voting trust providing for approval of the transaction.
KCS will continue to operate under its corporate name after the transaction and will keep its headquarters in Kansas City MO, while TFM still will be based in Mexico City.
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