Canadian National Railway Makes $33.7 Billion U.S. Bid For Kansas City Southern

Canadian National Railway (TSX:CNR) has entered the bidding for U.S. railroad operator Kansas City Southern.

Canadian National Railway said in a news release that it is offering $33.7 billion U.S. to buy Kansas City Southern (NYSE:KSU), trumping last month’s offer from rival Canadian Pacific Railway (TSX:CP) and sending the U.S. railroad operator’s share price skyrocketing 20% higher.

Canadian National’s offer of $325 per share represents a premium of 26.8% to Kansas City Southern’s last close on Monday. Canadian National’s offer includes $200 a share in cash and 1.059 of Canadian National shares.

In March, Canadian Pacific Railway agreed to acquire Kansas City Southern in a $25-billion U.S. cash-and-stock deal to create the first railway spanning the United States, Mexico and Canada, and standing to benefit from a pickup in continental trade.

Kansas City Southern shares were up 20% from Monday’s close to $306.02 in pre-market U.S. trading on news of the rival bid from Canadian National Railway.