Canadian National “is continuing to evaluate all options available to us,” said Jonathan Doorley, a spokesman for Canadian National.
Kansas City Southern said on Sunday that it had deemed an offer from Canadian Pacific superior to a bid from Canadian National, in the latest turn in a monthslong battle to become the first railroad to connect North America.
Canadian Pacific first put forward a roughly $29 billion bid for Kansas City Southern in March, before being topped by a $33.7 billion offer from its rival, Canadian National, in April. But the Canadian National deal hit a key regulatory challenge this month, sending Kansas City back to talks with Canadian Pacific. The talks proved fruitful.
The crown jewel in the deal is Mexico, as the railroads look to capitalize on trade flows across North America on the heels of the United States-Mexico-Canada Agreement signed into law last year.
Closing a deal could take time. It must be approved by shareholders of both companies, as well as approved by Mexican authorities and the Surface Transportation Board, the U.S. regulatory board that oversees rail deals.
Kansas City Southern has notified Canadian National of its intention to terminate that deal, both companies said on Sunday. Canadian National has five days to make a better offer. If Kansas City opts for Canadian Pacific, Canadian National will receive $700 million in breakup fees, according to the terms of their deal.
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Related: “Feds reject initial CN plan for merger with Kansas City railroad that’s drawn ire from some suburbs,” “Suburbs wary of proposed railway merger that could mean more freight trains,” and “Could railroad merger lead to more freight trains in the suburbs?”
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