By Dave Sebastian

 

Canadian Pacific Railway Ltd. said it has submitted a higher bid to buy Kansas City Southern in stock and cash, reigniting a takeover battle with Canadian National Railway Co. for the coveted U.S. railroad.

Including the assumption of $3.8 billion in outstanding Kansas City Southern debt, the offer represents an enterprise value of about $31 billion, Canadian Pacific said Tuesday. The proposed transaction values Kansas City Southern at $300 a share, representing a 34% premium based on Canadian Pacific's closing price Monday and Kansas City Southern's unaffected closing price on March 19, Canadian Pacific said.

The Wall Street Journal on Monday reported that the company was planning to make a new, increased offer for Kansas City Southern.

Kansas City Southern shareholders would get 2.884 Canadian Pacific common shares and $90 in cash for each share of Kansas City Southern common stock held.

Canadian Pacific had clinched a cash-and-stock deal with Kansas City Southern valued at around $275 a share, or $25 billion. Kansas City Southern later agreed to a sale to Canadian National instead after the company offered about $30 billion (then worth around $320 a share) and Canadian Pacific declined to raise its offer.

Kansas City Southern is the smallest of the nation's major freight railroads. The company plays a big role in U.S.-Mexico trade, with a network stretching across both countries and contributing to its desirability as an acquisition target.

Shares of Kansas City Southern rose about 7% to $288.51 and Canadian Pacific shares fell about 1.7% to $71.50 in premarket trading.

 

Write to Dave Sebastian at dave.sebastian@wsj.com

 

(END) Dow Jones Newswires

August 10, 2021 07:46 ET (11:46 GMT)

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