Blackstone, GIP Offer To Buy $18.4B-Worth Railroad Operator Kansas City Southern

Kansas City Southern KSU stock rose by 5.29% on Wednesday after a report by the Wall Street Journal suggested the company received a second takeover bid.

What Happened: The uptick in stock price put the market valuation of KSU around $18.4 billion. Kansas City Southern has a rail link across the United States and Mexico and plays an important role in trade between the two countries.

Blackstone Group Inc BX and Global Infrastructure Partners have submitted a takeover bid to the North American railroad operator, according to the Journal. 
Although the terms are still unclear, the Journal reported that Morgan Stanley MS is working with Kansas City Southern in reviewing the offer.

Why It Matters:  Currently, KSU ferries auto and industrial products from Mexico into Texas &andthe Midwest states and transports American farm goods to Mexico on its way back. It operates a rail link on the Panama Canal which also gives it access to waterways.

The growing trade tensions between U.S. and China could shift a lot of manufacturing bases from Asia to North America, Bloomberg noted earlier. In such a scenario, the freight railroad company could see a lot of growth opportunities.

Price Movement: KSU shares closed 5.3% higher at $193.78 on Wednesday and surged another 0.6% in the after-hours session.

Photo courtesy: John Allan via Wikimedia