CN in bid to derail CP-KCS merger
Canadian National Railway on Tuesday offered $33.7 billion to buy Kansas City Southern and usurp a rival’s bid to create the first network linking Canada, the United States and Mexico.
Montreal-based CN, the leading Canadian freight carrier, is trying to block competitor Canadian Pacific Railway (CP) from getting access to the American heartland via Kansas City.
A vast rail network reaches from the farms of the US Midwest to the ports of the Gulf of Mexico.
Both suitors are betting on a reworked trade deal between the United States, Mexico and Canada ratified last year to boost shipments.
CN’s offer tops a deal worth $29 billion that KCS reached last month with CP.
“Together, CN and KCS will create the premier railway for the 21st century, seamlessly connecting ports and rails in the United States, Mexico and Canada and providing superior service, enhanced competition and new market access to move goods across North America efficiently and safely,” CN said in a statement.
A CP-KCS merger, which received support from the KCS board but has yet to be approved by shareholders and regulators, would have a combined network spanning 20,000 miles (32,000 kilometres).
It would link the ports and factories of Mexico to the ports and energy resources of Canada and the factories of the Northeast US.
Mexico is a major exporter of automobiles, electronics and agricultural products, while also importing large amounts of grain and manufactured goods.
“CN is ideally positioned to combine with KCS to create a company with broader reach and greater scale, and to seamlessly connect more customers to rail hubs and ports in the US, Mexico and Canada,” CN president JJ Ruest said in a statement, adding that the two companies “have highly complementary networks with limited overlap.”