A bidding war is heating up for Kansas City Southern as a pair of Canadian railroads have put in competing bids to buy KCS. KCS is seen as an attractive target because of its access to Mexico, so a combination with one of the Canadian firms would create the first railroad to connect the US, Mexico, and Canada.
While Kansas City Southern and Canadian Pacific Railway have already agreed to a merger at a price of $275 per share, Canadian National Railway entered the fray, offering $325 per KCS share. The board has yet to make a decision on whether or not they will abandon CPR for CNR, but its shares reacted positively to the offer, jumping over 15%.
Canadian National believes that if their offer is approved, the combination will generate annual synergies of $1 billion annually and that it will be accretive to its EPS in the first full year.