Cross-Border Ops Make Kansas City Southern (KSU) Ripe for Takeover
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Kansas City Southern (NYSE: KSU) is up on the session following earlier commentary that the company might be a potential takeover target.
Earnings for Kansas City Southern are expected to rise 48 percent over the next four years, being fueled by its operations in Mexico and burgeoning U.S. oil production.
One Stephens analyst said an acquisition would be a no-brainer in the industry as Kansas City Southern has solid cross-border operations and strong network in the States. Potential suitors might include Berkshire's (NYSE: BRK-A)(NYSE: BRK-B) BNSF, Canadian National Railway (NYSE: CNI), Union Pacific (NYSE: UNP), and Canadian Pacific (NYSE: CP).
Bloomberg reports today that Kansas City Southern is the fifth-largest railroad operator in the U.S. and drew nearly half its 2012 revs from Mexico, a country which is expected to post GDP of 3.5 percent in 2013, versus 2.1 percent for the U.S. The company operates about 3,100 miles in Mexico.
On Thursday,Kansas City Southern was also picked to replace Dean Foods (NYSE: DF) in the S&P 500, bringing more confidence for investors.
While both Canadian railroad operators have networks that extend and connect to Kansas City Southern's. Of the two Canadian operators, Canadian National is able to take on more debt to finance a deal given its A- credit rating. Canadian Pacific is at BBB-.
BNSF might be possible given that Berkshire, run by Warren Buffett, doesn't think on a short-term basis. However, it and Union Pacific might have antitrust hurdles to overcome.
Shares of Kansas City Southern are up 0.7 percent, but rose as much as 1.8 percent earlier. It currently sports a market cap around $12.9 billion.
Earnings for Kansas City Southern are expected to rise 48 percent over the next four years, being fueled by its operations in Mexico and burgeoning U.S. oil production.
One Stephens analyst said an acquisition would be a no-brainer in the industry as Kansas City Southern has solid cross-border operations and strong network in the States. Potential suitors might include Berkshire's (NYSE: BRK-A)(NYSE: BRK-B) BNSF, Canadian National Railway (NYSE: CNI), Union Pacific (NYSE: UNP), and Canadian Pacific (NYSE: CP).
Bloomberg reports today that Kansas City Southern is the fifth-largest railroad operator in the U.S. and drew nearly half its 2012 revs from Mexico, a country which is expected to post GDP of 3.5 percent in 2013, versus 2.1 percent for the U.S. The company operates about 3,100 miles in Mexico.
On Thursday,Kansas City Southern was also picked to replace Dean Foods (NYSE: DF) in the S&P 500, bringing more confidence for investors.
While both Canadian railroad operators have networks that extend and connect to Kansas City Southern's. Of the two Canadian operators, Canadian National is able to take on more debt to finance a deal given its A- credit rating. Canadian Pacific is at BBB-.
BNSF might be possible given that Berkshire, run by Warren Buffett, doesn't think on a short-term basis. However, it and Union Pacific might have antitrust hurdles to overcome.
Shares of Kansas City Southern are up 0.7 percent, but rose as much as 1.8 percent earlier. It currently sports a market cap around $12.9 billion.
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