A $30 Billion Railroad Bidding War Ends Here
A regulator’s ruling vindicates Canadian Pacific’s decision not to match Canadian National’s offer for Kansas City Southern. Why would it start now?
One of the hottest takeover battles of the pandemic is decided by a railroad regulator.
Photographer: Luis Antonio Rojas/BloombergKansas City Southern is now Canadian Pacific Railway Ltd.’s takeover target to lose.
One of the hottest bidding wars of the pandemic entered a new phase on Tuesday after the U.S. Surface Transportation Board issued a long-awaited ruling on the proceedings and derailed Canadian National Railway Co.’s plan to buy Kansas City Southern. The target is the smallest of the major North American carriers, and any deal would mark the first successful consolidation of the industry since the STB adopted tougher merger rules in 2001. That made Kansas City Southern a hot commodity. The railroad initially agreed to sell itself to Canadian Pacific in March for about $29 billion. But Canadian National’s bigger balance sheet allowed it to offer a much higher valuation — about $34 billion including debt. Kansas City Southern’s board has consistently followed the money. Even when Canadian Pacific upped its offer earlier this month, Kansas City Southern stuck by Canadian National because its bid was still materially higher.