The Southern and Canadian Pacific of Kansas City were not immediately available for comment on the news of the Canadian National Bid.
CEO Patrick Ottensmeyer said last Friday during Kansas City Southern’s earnings call with analysts that the combination of the two railroads would create new service lines between Mexico and the industrial hubs of Chicago, Detroit, Toronto and Minneapolis.
Ottensmeyer added that the merger has the support of many diversions, noting that the combination of the two railways would improve rail options and that there is not a single market or a single customer experiencing a decline in rail options. ”
But it could be difficult for Kansas City Southern to turn down Canadian National unless Canadian Pacific returns with a higher bid.
The Canadian National Offer values Kansas City Southern at $ 325 per share – 27% higher than where the shares closed on Monday and 45% above the closing price before the Canadian Pacific deal was announced in March.
Kansas City Southern’s rail assets in Mexico have long made it a desirable takeover target.
Canadian National CEO JJ Ruest said in a news release that a merger with Kansas City Southern “seamlessly connects more customers with railroads and ports in the US, Mexico and Canada.”
“With safer service and better fuel efficiency on key routes from Mexico through the heartland of America, the result will be a safer, faster, cleaner and stronger railroad,” Ruest said.