Canadian Pacific Railway raised Tuesday its offer to purchase Kansas City Southern by $2 billion to $27.29 Billion, intensifying a bidding battle with Canadian National Railway.
This offer is a change from the second-biggest Canadian railroad operator’s April stance to not increase its bid. However, it is less than the $29.56 billion takeover offer that Canadian National and Kansas City agreed to in May.
By acquiring the U.S. railroad operator from one of its Canadian counterparts, Canada would be the first country to have a direct railway linking Canada, Mexico, and the United States.
Premarket trading saw shares of Kansas City rise 6.6% to $287. To approve its deal with Canadian National, it has scheduled a shareholder vote for Aug. 19.
Canadian Pacific’s sweetened offering consists of $90 cash and 2.884 shares for each Kansas City stock. This represents a per-share price of $300. Canadian National offered $325 per Kansas City Share.
Canadian Pacific made the initial move in March to acquire Kansas City, but Canadian National came in with a better offer that won the support of the U.S-based company.
Canadian Pacific stated that its competitor’s offer would decrease competition and negatively affect shippers.
“We are confident that the Surface Transportation Board will reject Daily Reuters proposal to use a trust voting system,” Chief Executive of Canadian Pacific Keith Creel stated in a letter to Kansas City.
Canadian National and Kansas City were not immediately available to comment.