Canadian National Railway Co T.CNR

Jim Cramer on KCS

[bagcheese]

KSU has crucial routes in Mexico. People don't understand why Mexico is crucial to the car industry--cars are shipped by rail. Almost every big carmaker has a factory in Mexico, and thanks to NAFTA, there aren't many import restrictions. Whoever owns KSU will own this market. Secondly, KSU has many routes in the Gulf of Mexico, which is seeing the biggest boom in the U.S. economy (industrial plants here like plastic). The size of the CN and CP bids means KSU was massively undervalued.

[rad10]

The synergy is clear but didn't CNR overpay?  CP gets  1 dollar per share from the deal (600 million) through the release clause. interesting to see how many divestments they need to make - to satisfy the STC & FECC fantastic combination - but at what cost?  Long KCS & CP

[Justhalffull]

Likely overpaid a bit, as is usual in many takeover bids.   But CN feels it will provide EBITDA of $1 billion annually, and will be accretive in the first full year following gain of control by CN.  How much business growth will the combination generate in the next 5 years will tell the final story.