Canadian National Bids $33.7B For Kansas City Southern

Canadian National Railway CNI is seeking to derail an effort by rival Canadian Pacific CP to acquire Kansas City Southern KSU by making a higher acquisition bid for the U.S.-based company.

What Happened: Canadian National is proposing a cash-and-stock transaction valued at $33.7 billion, or $325 per share.

In comparison, Canadian Pacific offered to buy Kansas City Southern for $25 billion in a cash-and-shares deal, or $275 per share.

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“We firmly believe our proposal is far superior to KCS’ existing agreement with CP because it offers superior financial value over the immediate and long-term, a more complementary strategic fit, greater choice and efficiencies for customers and enhanced benefits for employees and local communities,” Robert Pace, chairman of the board at Canadian National, said in a statement.

“We look forward to engaging constructively with KCS’ Board and all relevant stakeholders to deliver this superior transaction.”

Why It Matters: The two suitors for Kansas City Southern are seeking a union that would create the first railway spanning the entire North American continent across Canada, the United States and Mexico. Any acquisition would require the approval of the U.S. Surface Transportation Board.

Neither Canadian Pacific nor Kansas City Southern issued a public comment on the Canadian National offer.

CNI, KSU, CP Price Action: Canadian National shares were down 6.37% at $110.56 at last check Tuesday.

Kansas City Southern shares were rallying by 15.86% to $297.08. 

Canadian Pacific Railway shares were down 1.89% at $358.49. 

(Photo by Dan from PQ, Canada/Wikimedia Commons.)