WSJ News Exclusive | Canadian Pacific Plans New, Higher Bid for Kansas City Southern

Canadian Pacific Railway Ltd. is planning to make a new, increased offer for Kansas City Southern , according to people familiar with the matter, reigniting a takeover battle with Canadian National Railway Co. for the coveted U.S. railroad.

Canadian Pacific’s board of directors met Monday to authorize a bid that values Kansas City Southern near $300 a share, the people said, or about $27 billion. There is no guarantee Canadian Pacific will follow through with the plan; if it does, it is expected to do so soon.

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. Railroad takeovers are rare as regulators tend to view them warily, but Kansas City Southern is seen as one of the last operators of size that is potentially available for purchase. Its allure has only grown as the U.S. economy recovers from the slowdown triggered by the coronavirus pandemic.

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 CN offered about $30 billion (then worth around $320 a share) and Canadian Pacific declined to raise its offer.

Kansas City Southern shares closed Monday at $269.60 apiece and rose 6.5% in after-hours trading after The Wall Street Journal reported on Canadian Pacific’s plans.