CN makes $33.7B bid for Kansas City Southern

[Omaha Steve]

Source: AP

By MICHELLE CHAPMAN

A bidding war is breaking out for Kansas City Southern, with Canadian National Railway making a $33.7 billion cash-and-stock offer for the railway.

The bid trumps a $25 billion cash-and-stock proposal made by Canadian Pacific last month.

Shares of Kansas City Southern jumped more than 18% in Tuesday premarket trading. CN’s stock fell 9%. Shares of Canadian Pacific Railway Ltd. rose 2.6%.

CN said its offer is worth $325 per Kansas City Southern share. Kansas City Southern shareholders would receive $200 in cash and 1.059 shares of CN common stock for each share. The transaction would include about $3.8 billion in Kansas City Southern debt.



FILE - In this May 23, 2012, file photo, surveyors work next to Canadian Pacific Rail trains which are parked on the train tracks in Toronto. Wary regulators have not approved a major railroad merg...



Read more: https://apnews.com/article/business-89b0624c20f9ec4308f7b1fa9fd8e9f4

[KY_EnviroGuy]

1. I suppose they could call it CanKan, lol.

Better a Canadian firm after it rather than another "C" nation but I suspect they prefer buying up farm land and meat producers.

KY

[Gore1FL]

2. I wonder what the outcome means for the rest of the industry.

If approved, that's likely going to provoke other moves and consolidations among the remaining class I railroads.

[brooklynite]

4. The private rail industry has pretty much consolidated as much as it can...

Down to BNSF and UP in the west and NS and CSX in the east.

CN-KCS (AND NdeM) would be a largely non-competing system running on a north-south axis in the center of the country.

[Gore1FL]

6. There was almost a merger between CN and BNSF when I worked for UP.

When the STB delayed it for review (as I recollect--it was a while ago) both railroads decided to cease the endeavor

The employee scuttlebutt/conventional wisdom at the time was if that happened we'd have merged with the CSXT. I don't know how much there was to those rumors, though. Everyone was afraid. We had just gone through the CNW and SP mergers, and no one wanted the consolidation/cutover hell again!

I suspect the STB will have a thing or two to study about this one as well.

[Politicub]

3. Too bad Amtrak can't buy the line. And lease the right to use it

for freight to CN.

[DallasNE]

5. It Has Always Been A Mystery Why Kansas City Southern (KCS)

Hasn't been picked off by American railroads in the earlier merger wave. It looked like a natural for several roads, including the current Union Pacific (UPRR) and Burlington Northern Santa Fe (BNSF). After all, it has been a profitable company.

I can see why these Canadian railroads would like a connection to the gulf coast but to my knowledge they do not have lines to either Kansas City or St. Louis. I suppose they could acquire trackage rights, most likely with BNSF but that would be a separate transaction.

The system map link shows both the rail lines and trackage rights of KCS.

https://upload.wikimedia.org/wikipedia/commons/8/84/Kansas_City_Southern_Railway_system_map.svg