(Reuters) -Canadian Pacific Railway Ltd on Tuesday raised its offer to buy Kansas City Southern by about $2 billion to $27.29 billion, deepening a bidding war with larger rival Canadian National Railway Co.
The offer marks a u-turn from the second-biggest Canadian railroad operator’s stance in April to not raise its bid, but it is lower than a $29.56 billion takeover proposal agreed by Canadian National and Kansas City in May.
The acquisition of the U.S. railroad operator by either of its Canadian peers would create the first direct railway linking Canada, the United States and Mexico.
Shares of Kansas City were 6.6% higher in premarket trading at $287. It has set a shareholder vote on Aug. 19 to gain approval for its deal with Canadian National.
Canadian Pacific’s sweetened offer consists of $90 in cash and 2.884 of its shares for each stock of Kansas City, representing a per-share value of $300. Canadian National has offered $325 per Kansas City share.
While Canadian Pacific had made the initial move to acquire Kansas City in March, Canadian National swooped in with a higher bid that eventually won support from the U.S.-based company.
Canadian Pacific has said its rival’s offer would reduce competition and negatively impact shippers.
“We remain confident that the Surface Transportation Board will ultimately reject CN’s proposal to use a voting trust,” Canadian Pacific Chief Executive Keith Creel said in a letter to Kansas City.
Kansas City and Canadian National were not immediately available for comment.
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