Kansas City Southern Rejects $20 Billion Takeover Offer From Investor Group--2nd Update
September 09 2020 - 4:43PM
Dow Jones News
By Cara Lombardo and Miriam Gottfried
Kansas City Southern has rejected a roughly $20 billion takeover
offer from a group of investors, arguing that the bid undervalues
the railroad operator, according to people familiar with the
matter.
Global Infrastructure Partners and the infrastructure arm of
private-equity giant Blackstone Group Inc. had offered Kansas City
Southern $208 a share, some of the people said. Kansas City
rejected that offer after earlier brushing back a bid that was
below $200 a share, the people said. The two sides aren't in
discussions.
The most recent offer, which The Wall Street Journal first
reported last week without quantifying it, represented a roughly
35% premium to Kansas City Southern's share price before the
Journal reported that the firms were contemplating a bid in late
July, when the stock was already rising on speculation of a
potential takeover.
Without commenting on the offer, Kansas City Southern said at an
industry conference Wednesday morning that it was re-establishing
the financial guidance it withdrew earlier this year in the early
days of the coronavirus pandemic now that visibility has improved.
It now expects 2020 earnings per share roughly in line with last
year's.
The rail industry suffered a sharp drop in volumes earlier this
year as the pandemic slowed trade and temporarily shut many U.S.
stores, but volumes have been steadily returning. Kansas City
Southern said at the conference that its volumes, which bottomed
out in early May, have returned to pre-pandemic levels. Still, its
third-quarter volumes are down 6% to date and revenues are down
14%.
Kansas City Southern is the smallest of the five major freight
railroads in the U.S. The company plays a key role in U.S.-Mexico
trade, with a network across both countries. Its trains bring autos
and other industrial products up from factories south of the border
into Texas and the Midwest and haul American farm goods back to
Mexico. It also runs a rail link along the Panama Canal.
Like other large railroads in North America, Kansas City
Southern is in the midst of implementing a new operating plan that
calls for running fewer, longer trains on a tighter schedule. The
overhaul will require fewer locomotives and railcars and has
boosted the company's profits and shares.
Write to Cara Lombardo at cara.lombardo@wsj.com and Miriam
Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
September 09, 2020 16:28 ET (20:28 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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