We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • CSCMP EDGE 2023
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • CSCMP EDGE 2023
    • Upload Your Video
Home » CN claims victory over rival railway in bidding war for Kansas City Southern

CN claims victory over rival railway in bidding war for Kansas City Southern

If approved by regulators, $33.6 billion merger would link Canada, U.S., and Mexico as new USMCA trade agreement takes effect.

canadian_national_Screen_Shot_2021-05-21_at_11.40.31_AM.png
May 21, 2021
Ben Ames
No Comments
The bidding war to acquire U.S. freight railway Kansas City Southern (KCS) appears to have been won by Canadian National Inc. (CN), which today announced that its $33.6 billion offer has trumped a competing tender from Canadian Pacific Railway, which had offered $29 billion in March.

By linking its east-and-west rail corridor with KCS’ north-and-south line, the combination would establish a continuous rail network spanning the North American continent and connecting Canada, the U.S., and Mexico just as the new USMCA trade deal begins too displace the previous NAFTA trade agreement.

In a statement today, Montreal-based CN said it had signed a “definitive merger agreement” with both companies’ boards of directors that would “bring together highly complementary networks to benefit customers and enhance competition.”

CN’s argument that its move will actually help freight customers and industry competition is significant because the proposed deal still hinges on approval by government regulators such as the U.S. Surface Transportation Board (STB).

In fact, Canadian Pacific today today said that it will still pursue the STB application for its own bid despite KCS terminating its original merger agreement with CP. According to Canadian Pacific, its version of a merger would sustain a more “pro-competitive” solution and better address the interests of both KCS and the public.

A statement from CN President and CEO JJ Ruest appeared to address concerns that the deal could give the combined railways so much market share that they could squeeze shippers with higher rates. “I would like to thank the numerous stakeholders of both companies who have demonstrated overwhelming support for this compelling combination, and we look forward to delivering the many benefits of this pro-competitive transaction to them,” Ruest said in a release. “I am confident that together with KCS’ experienced and talented team, we will meaningfully connect the continent – enhancing competition, offering more choice for customers, and driving environmental stewardship and shareholder value.”

Likewise, KCS’ president and chief executive officer, Patrick Ottensmeyer, made a similar pitch. “Our companies’ cultures are strongly aligned, and we share a commitment to environmental stewardship, safe operations, reliable service, and outstanding performance,” Ottensmeyer said in a release. “As a larger continental enterprise with complementary routes and an enhanced platform for revenue growth, capital investment, and job creation, we will be positioned to deliver on the transaction’s powerful synergies which will create new growth opportunities for our customers, employees, labor partners, communities and shareholders.”

If the deal is approved, CN said it would maintain its corporate headquarters in Montreal, Canada, and establish Kansas City, Missouri, as the combined company’s United States headquarters. The Mexico headquarters will remain in Mexico City with the operations center in Monterrey. CN also pledged to make “significant infrastructure investments” in communities across the new network, including Illinois, Missouri, Michigan, Louisiana, and Texas.

But the risk of rejection by regulators is real, according to rail industry experts with Baird Equity Research. “Given the need for the deal to serve the public interest and enhance competition, there is considerable risk the STB does not authorize the voting trust structure or approve the CN-KCS combination. The industry’s fundamental outlook remains favorable, but initial DoJ and STB commentary reinforces our view a larger rail M&A wave is unlikely at this time,” Garrett Holland, a Baird senior research analyst, said in a release.

Editor's note: This story was revised on May 21 to include input from Baird.

It's official: CN and KCS have entered into a definitive merger agreement to create the premier railway for the 21st century. See more about the agreement and important info: https://t.co/n8kZZvqjoM #ConnectedContinent pic.twitter.com/34JXcG9Fdr

— Canadian National (@CNRailway) May 21, 2021
Rail
KEYWORDS Canadian National Railway Canadian Pacific Railway Kansas City Southern
    • Related Articles

      CN offers $33.7 billion to one-up rival’s bid for Kansas City Southern railway

      Canadian Pacific gains advantage in fight to merge with U.S. freight railway Kansas City Southern

      Canadian Pacific Railway bids $29 billion to buy Kansas City Southern

    Benames
    Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

    Recent Articles by Ben Ames

    Former XPO chief Brad Jacobs builds $1 billion war chest for another acquisition run

    Hapag-Lloyd is latest to add “war risk surcharge” on shipments to and from Israel

    Startup says its electric motor can save power in conveyors

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Intermodal groups applaud White House pick for new Multimodal Freight Office

    • MercuryGate acquires cross-border customs clearance specialist ITS

    • A new outlook that’s a lot like the old outlook

    • Rising tech firms target logistics challenges

    • Verizon: Employers struggle to balance cybersecurity with business imperatives

    Now Playing on DCV-TV

    1939a893 c406 4468 af9b 5bbb78acd8c1

    How Will Rate Increases from UPS and LTL Carriers Affect Your Freight Budget in 2024?

    DCV-TV 4: Viewer Contributed
    In the logistics industry, the task of quantifying cost increases from parcel and LTL carriers is becoming more complicated. We don’t expect this trend to end anytime soon, as these companies look for ways to use greater precision in their pricing by drawing on the greater amount of data available.

    FEATURED WHITE PAPERS

    • Exploring Forklift Energy Solutions for Maximum ROI

    • Identifying How Sortation Automation Can Address Challenges for Parcel Processors

    • Unlocking efficiency and growth

    • Quarterly Freight Data Report: Q3 2023

    View More

    Subscribe to DC Velocity Magazine

    GET YOUR FREE SUBSCRIPTION
    • SUBSCRIBE
    • NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing