Blackstone, GIP Make Takeover Bid for Kansas City Southern -- Update
September 02 2020 - 3:38PM
Dow Jones News
By Cara Lombardo and Miriam Gottfried
A group of buyout investors has made a takeover offer for
railroad operator Kansas City Southern, which has a market value of
more than $17 billion, according to people familiar with the
matter.
Blackstone Group Inc. and Global Infrastructure Partners
submitted the bid after a previous approach was rebuffed, the
people said. It is unclear whether Kansas City Southern will be
receptive this time and details of the offer couldn't be
learned.
Kansas City Southern shares traded around $184.78 Wednesday
afternoon, giving the Missouri-based company a market value of
about $17.5 billion.
The Wall Street Journal reported in late July that the
private-equity firms were contemplating a takeover bid for the
railroad. Since then, Kansas City Southern's stock price has jumped
on hopes of a deal.
Kansas City Southern is working with Morgan Stanley to consider
the bid, some of the people said.
Kansas City Southern is the smallest of the five major freight
railroads in the U.S. The company plays a key role in U.S.-Mexico
trade, with a network across both countries. Its trains bring autos
and other industrial products up from factories south of the border
into Texas and the Midwest and haul American farm goods back to
Mexico. It also runs a rail link along the Panama Canal.
Like other large railroads in North America, Kansas City
Southern is in the midst of implementing a new operating plan that
calls for running fewer, longer trains on a tighter schedule. The
overhaul will require fewer locomotives and railcars and has
boosted the company's profits and shares.
There has been a fair amount of merger activity in the railroad
industry. Brookfield Infrastructure Partners LP and Singapore
sovereign-wealth fund GIC agreed to take railroad operator Genesee
& Wyoming Inc. private for $8.4 billion including debt last
year. Genesee & Wyoming had itself been an active consolidator
of short-line and regional railroads.
Even if Kansas City Southern rebuffs the investors, the bid
could prompt other railroads that have long coveted the company and
its ties to Mexico trade to come out of the woodwork, though deals
in the sector are closely examined by regulators.
Write to Cara Lombardo at cara.lombardo@wsj.com and Miriam
Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
September 02, 2020 15:23 ET (19:23 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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