CP urges Kansas City Southern to reject competing $33.6B bid

OMAHA, Neb. (AP) — Canadian Pacific is urging Kansas City Southern to reject Canadian National's rival $33.6 billion takeover bid, but it still refuses to increase its own $25 billion bid.

Canadian Pacific maintained Thursday that Canadian National's bid won't be approved by regulators because it would hurt competition and add to rail congestion around Chicago, so CEO Keith Creel doesn't see a need to increase its offer. Kansas City Southern officials didn't immediately respond Thursday morning, but a week earlier they backed the CN offer.

“My view, CP’s view, has been and continues to be, the alternative is a deal that can’t be approved,” Creel said Thursday. “It’s not necessary to engage in a bidding war to match CN’s value, which is not achievable. There is no path to deal certainty. In fact, it’s a path wrought with deal uncertainty.”

Canadian Pacific had said combining Kansas City Southern and Canadian National would hurt competition because both those companies have rail lines that compete for business between the Midwest and the Gulf Coast. Canadian Pacific’s network connects to Kansas City Southern near its headquarters in Kansas City, Missouri, but those two railroads don’t overlap elsewhere.

Canadian National has said it doesn’t believe its offer would hurt competition, and it is confident it could address any competitive concerns later in the Surface Transportation Board's review process. Canadian National officials didn’t immediately respond Thursday.

A week ago, Canadian National won the support of Kansas City Southern by sweetening its offer to include more stock and by offering to pay the $700 million breakup fee that would be owned to Canadian Pacific if Kansas City Southern walks away from the deal that was announced in March.

CN’s latest offer still...