Sumary of One of two Canadian railroads bidding for Kansas City Southern drops out.:
- Canadian Pacific has emerged as the winner in a long-running battle to acquire Kansas City Southern, putting it in position to become the first railroad operator whose network extends from Canada to Mexico.
- Its rival in the bidding, Canadian National, said on Wednesday that it had received notice from Kansas City Southern that it was terminating a merger agreement they signed in May.
- mergers have consolidated the industry to seven railways from more than 100. The key component of the deal is access to Mexico, as railroads look to capitalize on trade flows across North America on the heels of the United States-Mexico-Canada Agreement, which was signed into law last year.
- ”Canadian Pacific first put forward its $29 billion bid for Kansas City Southern in March, before being topped by a $33.7 billion offer from Canadian National in April.
- But the Canadian National deal hit a regulatory challenge last month.
- In response, Kansas City Southern said on Sunday that it had chosen Canadian Pacific as a superior suitor.
- Canadian Pacific sweetened its cash-and-stock offer in August, valuing Kansas City at about $31 billion.
- To fund its deal, Canadian Pacific raised the value it prescribed to Kansas City Southern shares and increased its debt financing to $9.5 billion from $8.6 billion.