Brooke Sutherland, Columnist

This Blockbuster Rail Deal May Make It to Destination

After two failed attempts, Canadian Pacific is honing its M&A tactics with a knockout bid for Kansas City Southern couched in climate-friendly terms.

March 21, 2021 at 6:39 PM UTC

By Brooke Sutherland

Brooke Sutherland is Bloomberg News' Boston bureau chief and writes the Industrial Strength Newsletter. She was previously a Bloomberg Opinion columnist covering deals and industrial companies and an M&A reporter for Bloomberg News.

With Kansas City Southern, merger-hungry rail giant Canadian Pacific may have its best chance of sealing a deal. — With Kansas City Southern, merger-hungry rail giant Canadian Pacific may have its best chance of sealing a deal.
Photographer: Luis Antonio Rojas/Bloomberg

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When it comes to massive railroad mergers, the third time may be the charm.

Canadian Pacific Railway Ltd.’s proposed blockbuster takeover of Kansas City Southern is its third attempt in recent years to further consolidate the already concentrated North American railroad industry. Having been rejected first by CSX Corp. and then by Norfolk Southern Corp. in recent years over too-low bids and serious antitrust concerns, the carrier is trying a new tactic that’s very much of the moment: It’s offering investors in the target a bubble-like takeover valuation while pitching the deal to regulators in climate-friendly terms. It just might work.