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 (NYSE: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 (NYSE: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