Planes, trains and automobiles. It’s a rare occasion nowadays when all three are making headlines in the same day. But today, it’s happening. The race to be the leader of the EV industry is moving auto stock prices heavily. The airline industry is continuing to slip as a result of the coronavirus pandemic’s travel restrictions. Now, with two Canadian rail companies in a bidding war, the train industry is piquing investors interests. And it looks like Kansas City Southern (NYSE:KSU) stock stands to gain quite a bit from the business battle.
Ownership of Kansas City Southern has huge implications. Kansas City Southern is the smallest of the major railway companies in the United States, but it has rail assets in Mexico. This means the company that takes ownership over KSU would have the rare opportunity to connect Canada, Mexico and the U.S. with a single freight-rail system. So, when Kansas City Southern offered itself up for sale, two of Canada’s biggest rail companies jumped on the chance for the valuable asset.
Canadian Pacific (NYSE:CP) offered to buy Kansas City Southern last month for $25 billion. The deal was looking like it would pan out, but this morning, rival Canadian National (NYSE:CNI) upped the ante with a $30 billion offer.
The result is a standoff for the two companies looking to strike a deal on this very rare opportunity.
KSU Stock Benefits From the Canadian Bidding War
The bidding war between the two locomotive companies is picking up steam this afternoon. Just hours after Canadian International shook up the surefire deal with its $30 billion offer, Canadian Pacific has responded. Canadian Pacific is floating an offer of $33.7 billion as of noon today.
With the quick response from Canadian Pacific, investors can be assured that this bidding war is a huge moment for KSU stock. A merger would be a huge deal for either of the two companies. As a result of the financial fisticuffs, KSU stock has rocketed today. Shares are currently up 16%, trading for $41. Trading volume is quadruple the norm as well, with 4.4 million shares changing hands in today’s session.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article.