Kansas City Southern: CP/CN Railway Bidding War

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  • #36299
    Craig Hasler
    Participant

    I’ve been following this merger since March when it was reported that talks between Canadian Pacific and Kansas City Southern were occurring. I find the bidding war dynamics to be very interesting given the lack of significant players in the railroad industry. Do you think there is value in CN overpaying to ensure that KSU does not end up in the hands of its competitor? What is your next move now if you are CP?

    https://www.cnbc.com/2021/05/21/kansas-city-southern-exits-canadian-pacific-deal-to-take-cnis-34-billion-offer.html

    #38892
    Ahmed Zainalabedin
    Participant

    Interesting case to follow! Thanks for highlighting it. I believe CP or CN can increase their bids as long as they are anticipating value from synergies or any other improvements will be created once one of the firms acquires KCS. CP or CN should not offer higher than the maximum price in which at least value would equal zero to protect their shareholders.

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