CN makes $33.7B bid for Kansas City Southern

In this May 23, 2012, file photo, surveyors work next to Canadian Pacific Rail trains which are parked on the train tracks in Toronto. Wary regulators have not approved a major railroad merger since the 1990s, but industry analysts say Canadian Pacific’s proposed $25 billion acquisition of Kansas City Southern has a good chance of getting the green light because there is little overlap between the two lines. (Nathan Denette/The Canadian Press via AP, File)

In this Nov. 5, 2004 file photo, the logo of Kansas City Southern is down on a restored 1954 Kansas City Southern passenger locomotive at Union Station in Kansas City, Mo. A bidding war is breaking out for Kansas City Southern, with Canadian National Railway making a $33.7 billion cash-and-stock offer for the railway. The bid trumps a $25 billion cash-and-stock proposal made by Canadian Pacific last month. Shares of Kansas City Southern jumped more than 18% in Tuesday, April 20, 2021 premarket trading.(Norman Ng/The Kansas City Star via AP)

A bidding war is breaking out for Kansas City Southern, with Canadian National Railway making a $33.7 billion cash-and-stock offer for the railway.

The bid trumps a $25 billion cash-and-stock proposal made by Canadian Pacific last month.

Shares of Kansas City Southern jumped more than 18% in Tuesday premarket trading. CN's stock fell 9%. Shares of Canadian Pacific Railway Ltd. rose 2.6%.

CN said its offer is worth $325 per Kansas City Southern share. Kansas City Southern shareholders would receive $200 in cash and 1.059 shares of CN common stock for each share. The transaction would include about $3.8 billion in Kansas City Southern debt.

If the two companies were to combine, it would create a business connecting ports and rails in the U.S., Mexico and Canada.

“CN and Kansas City Southern have highly complementary networks with limited overlap that will enable them to accelerate growth in single-owner, single-operator, end-to-end service across North America," CN President and CEO JJ Ruest said in a statement.

In contrast, Canadian Pacific said its proposed deal would create a combined company that would operate about 20,000 miles of railway, employ 20,000 people and generate annual revenue of about $8.7 billion.

A representative for Kansas City Southern didn't immediately respond to an email seeking comment.