Report: Private Equity Firms Eye Kansas City Southern Takeover

Kansas City Southern GE ES44AC 4696 leads EMD SD70MAC 3934 under Highway 58 in Belton, Mo. on April 11, 2010. Photo by Kevin EuDaly.

Report: Private Equity Firms Eye Kansas City Southern Takeover

By Railfan & Railroad Staff

KANSAS CITY — Two private equity firms are speaking to banks about financing a takeover of Kansas City Southern in a deal that would be worth more than $21 billion, the Wall Street Journal reported late Friday. The deal would involve Blackstone Group Inc. and Global Infrastructure Partners and financing from CitiBank, according to anonymous sources. Kansas City Southern declined to comment on the story. 

Although details were limited, KCS stock jumped 14 percent late Friday, from $153.72 to $182.44 in just 15 minutes. It slid down to about $177 at the end of trading. The story noted, however, that it was unclear if the private equity firms would actually go through with a deal or if the railroad would even be open to it. 

The Wall Street Journal reported that “If there is a deal, it would be significant. Kansas City Southern had a market value of roughly $14 billion Friday afternoon [July 31] and including debt, the value of a bid could exceed $21 billion. The bid being discussed would likely include about $6.5 billion worth of debt financing.”

Although KCS is the smallest of North America’s seven Class One railroads, it is the only one with a significant presence in Mexico, making it a particularly fruitful target for investors or other railroads. 

This article was posted on: July 31, 2020