By now, we all know the basics: It started back on March 21 as a bold expansion bid by the sixth-largest carrier, Canadian Pacific. CP and KCS, smallest of the “Big 7” Class I’s, negotiated a two-party deal to acquire a north-south track network connecting a core of six Canadian provinces (with about 12,500 route-miles) with a core of important Mexican northeastern and central states (districts) served by Kansas City Southern de Mexico, S.A. de C.V. The Mexican franchise covers about 2,261 miles. In the middle of this geography is the Kansas City Southern rail network covering about 3,400 route-miles in 10 US states. Its primary terminals include Kansas City, Shreveport, New Orleans, Dallas and Houston.
After about a month, a counter-bid was made. CN upped the offered price for the KCS combined package from about $25 billion to nearly $34 billion.
What we are seeing as a result is somewhat like a Chess game, only the object is not to capture the King across a 64-square playing board. Here, the commercial object is to capture prime real estate rather than pawns and knights.
