The best of two proposals on the table to buy Kansas City Southern has been determined to be a $31 billion offering from Canadian Pacific. In a statement issued Sunday, the Kansas City-based Corporation said it had informed rival bidder Canadian National that it wishes to terminate a merger agreement and enter into a transaction with Canadian Pacific.
However, it is not yet finalized. Canadian National has five working days to improve its offer, and the Kansas City Southern board of directors may decide that a revised CN offer is preferable. The railroad said, “CN will make carefully considered decisions in the interests of all CN shareholders and stakeholders and in line with our strategic priorities.”
On the other hand, regulators have already approved Canadian Pacific’s use of a voting trust since the combination of Canadian Pacific and Kansas City Southern poses fewer competition problems. Canadian Pacific has set a Sunday deadline for their offer. Both Canadian bids contain a cash and equity mix and the assumption of approximately $3.8 billion in debt. As it is under pressure from a significant shareholder to abandon the project, it is unclear whether Canadian National will increase its bid.