Canadian National offers $ 30 billion for Kansas City Southern

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Actions of Kansas City Southern (KSU) rose nearly 15% Tuesday in the news. Canadian National (CNI) fell more than 7%, while Pacific Canada rose about 1%.
Canadian Pacific (CP) and Kansas City Southern agreed to merge last month, a deal that would create a transportation giant that would span all of North America, from Canada to Mexico.

Kansas City Southern and Pacific Canada were not immediately available for comment on news of the Canadian national candidacy.

During the Kansas City Southern earnings call with analysts last Friday, CEO Patrick Ottensmeyer said the combination of the two railroads would create new service lines between Mexico and the industrial centers of Chicago, Detroit, Toronto and Minneapolis.

Ottensmeyer added that the merger has the support of many shippers, noting that the combination of the two railways “will improve rail options” and that “there is no single market or single customer experiencing a reduction in rail options. they have today. ”

But it may be difficult for Kansas City Southern to reject Canadian nationality unless Pacific Canada returns with a higher bid.

Canadian national bid values ​​Kansas City Southern at $ 325 per share, 27% more than it closed on Monday and 45% above its closing price before Canada’s Pacific-Pacific deal was announced in March.

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Kansas City Southern’s rail assets in Mexico have long become a desirable acquisition target.

There has been talk for decades about whether one of the two Canadian railroads or the American railroad giants Union Pacific (UNP), Norfolk Southern (NSC), CSX (CSX) or Burlington Northern Santa Fe, owned by Warrren Buffett’s Berkshire Hathaway (BRKB), could try to acquire Kansas City Southern.

Canadian National CEO JJ Ruest said in a press release that a merger with Kansas City Southern “would seamlessly connect more customers to railroad centers and ports in the U.S., Mexico and Canada.”

“With safer service and better fuel efficiency on key routes from Mexico through Central America, the result will be a safer, faster, cleaner, and stronger railroad,” Ruest said.

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