A merger between Canadian railway CN (NYSE: CNI) and Kansas City Southern (NYSE: KSU) would created a formidable opponent for what should be the industry’s largest threat: long-haul trucking, CN executives said Tuesday morning in their pitch to acquire Kansas City Southern (KCS).
“What’s really missing in North America at this point is a true north-south railroad … that can really rival with truck,” said CN President and CEO JJ Ruest in a call explaining the bid to Wall Street analysts and investors.
CN sees $8 billion in market opportunities post-merger, including a $6 billion truck-addressable market with rapid future growth resulting from the reshoring trend and the trade agreement among the U.S., Canada and Mexico, according to Ruest and CN’s PowerPoint presentation.
CN’s $33.7 billion cash-and-stock offer to acquire KCS comes less than a month after KCS and Canadian Pacific (NYSE: CP) said CP was seeking to acquire KCS for $29 billion. The new CP-KCS railroad, pending regulatory and shareholder approval, would be named “CPKC.”
CN’s offer entails providing KCS shareholders $325 per common share based on current market prices, which equals a total enterprise value of $33.7 billion, including the assumption of approximately $3.8 billion of KCS debt.
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Stephen Webster
The ideal of moving more of the freight miles by rail is good. But make sure that the truck drivers are paid at least $21.00U S per hour plus a medical plan for for the truck drivers and then family and get overtime pay.
William
You’re still using a truck to move the product.