There's a battle for a railroad named Kansas City Southern (KSU) between the two canadian railroads: CP and CNR.
First, CP offered 25 billion dollars (about 275 USD a share)
Today, CNR offers more than 30 billion dollars, via a combination of cash and CNR stock (about 325 USD a share).
First, I thought that CNR would overpay, but after a quick look at KSU, it looks like that business is interesting. Not as good as CNR and CP, but not bad either.
Forward PE (after CNR bid): 24
Profit margin: 24%
Debt level: medium-high
Annual EPS growth last 5 years: 9%
Estimated annual EPS growth next 5 years: 15%
Free cash flows: Growing nicely every year since 2015
|Kansas City Southern|
Kansas City is not as well managed as CP or CNR, but that's probably the key of that acquisition. These two great operators would probably improve a lot KSU by buying it. And the successful buyer will own a very large territory. That's more strategic than most acquisitons in other sectors. Because if you control roads, you're very powerful. More powerful than if you buy another company in a sector full of competition.
Imagine that, you already control a vast portion of railroads in North America, and now, you can control the midwest of the states and the eastern part of Mexico!
I think that it's a very exciting acquisition.