Kansas City Southern was not immediately available for comment about the news of the Canadian National bid. Canadian Pacific had no comment about the competing offer.
During Kansas City Southern’s earnings call with analysts last Friday, CEO Patrick Ottensmeyer said 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 shippers, noting that the combination of the two railroads would “enhance rail options” and that “there’s not a single market or a single customer that experiences a reduction in rail options that they have today.”
But it may be tough for Kansas City Southern to turn down Canadian National — unless Canadian Pacific comes back with a higher bid.
The Canadian National offer values Kansas City Southern at $325 a share — 27% higher than where the shares closed Monday and 45% above its 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 would “seamlessly connect more customers to rail hubs 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 railway,” Ruest said.