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Canadian National Railway Company (TSX:CNR) announced on Monday, April 26, that more than 400 of its stakeholders have extended their support in favor of its Kansas City Southern takeover.
However, its stock was trading in red on Monday, marginally down by 0.23 per cent (12.32PM EST).
CN Rail’s rival Canadian Pacific Railway Limited (TSX:CP), which is also looking to buy the US-based railroad service provider, saw its stocks droop by 0.42 per cent on Monday (12.32PM EST).
Meanwhile, Kansas City Southern (NYSE:KSU, KSU:US) stock gained about 0.05 per cent on the back of CN Rail’s latest announcement.
CN Rail is also set to release the results of its first-quarter earnings for 2021 on Monday after market close.
Source: Pixabay.com
How Is Kansas City Southern Responding To CN Rail’s Superior Bid?
Kansas City Southern stated last week, on April 24, that CN Rail’s offer could lead to a better deal than a bid by CP Rail. The US company is said to be in talks with CN Rail, and both could negotiate on the “superior proposal” of US$ 30 billion against Canadian Pacific Railway’s bid worth US$ 25 billion.
However, the US-based rail transportation firm also remained conservative and said that there is no assurance that the discussion with CN Rail would lead to a final deal.
The two Canadian railways are clashing over the acquisition of Kansas City Southern as both are looking for an extended railroad that connects through the US, Canada, and Mexico. This extended railway network would offer benefit from the renewed trade alliance, Canada-United States-Mexico Agreement (CUSMA). Hence, this rivalry could get more unpleasant in the upcoming days.
Let us glance at both the Canadian railway stocks’ price performance.
Stocks of CN Rail Co (TSX:CNR) has entered the bearish zone after the “superior proposal” announcement and fell by nine per cent in the past one week. However, it is still up by 21 per cent for the past year.
The ground transport stock has plunged by seven per cent month-to-date (MTD) and decreased 3.3 per cent year-to-date (YTD).
Shares of CP Railway Limited (TSX:CP) have outperformed CN Rail stock this year, up nearly eight per cent YTD. It also surpassed its rival in the past one-year performance and returned almost 64 per cent. Its stock was trading at C$ 460.28 apiece at the time of writing this (12:3PM).
