Kansas City Missouri USA - Rob Reilly, a Topeka native, and now the chief operating officer for Canadian National Railway (CN), said the Montreal-based company had reviewed the possibility of making a deal for Kansas City Southern (KCS) several times.
 
But it wasn't until this Tuesday that it made an unsolicited US$33.7 billion bid to buy the longtime Kansas City institution.
 
So what changed?
 
"What changed is KCS shareholders have decided it's up for bid with its agreement with Canadian Pacific (CP)," Reilly said in an interview with The Star.
 
"We see that as an opportunity for us to expand our network."
 
KCS, which is one of the smaller major railroad companies in North America, has been a popular takeover target during the last year.
 
With a rail network that originates in the Midwest and extends into Mexico, KCS is now the target of two Canadian rail companies looking to complete the first rail network that extends into the three North American countries.
 
A newly struck trade pact called the U.S.-Mexico-Canada Agreement, along with the expectation that cross-border trade between the three countries will pick up as a result, has fueled an interest in creating a rail network across all three countries.
 
CN's offer to buy KCS comes barely more than a month after KCS's board of directors accepted a separate bid by CP in a deal valued at US$25 billion.
 
KCS could opt to take the CN offer, but doing so would mean CP is owed a US$700 million breakup fee.
 
CN believes its bid is superior to that of its rival CP.
 
For one, there's some simple math involved, CN's offer involves 21 percent more money.
 
KCS shareholders would get US$200 per share if the deal closes with CN versus US$90 per share with CP.
 
CN's offer also doesn't require a vote by its shareholders because its proposed issuance of stock is below a required threshold.
 
Reilly also said he believes CN has a better rail network.
 
CP's rail network is smaller than CN's.
 
Both extend east-to-west across the lower portions of the major Canadian provinces.
 
But CN's network expands further into the United States with a line that extends south to the Gulf of Mexico.
 
CP, on the other hand, called CN's bid on Tuesday "illusory and inferior."
 
Among CP's criticisms is that CN's offer poses antitrust risksM and threatens to reduce competition in the North American rail industry.
 
"CN's proposal increases regulatory and anti-trust risk for KCS shareholders, and decreases benefits for customers, employees, and other stakeholders," CP said in a news release on Tuesday.
 
Reilly disagrees on that point.
 
"We don't see any additional regulatory risk than the current proposed agreement with CP brought," Reilly said.
 
So far, KCS has said little about the competing bid, except to acknowledge that it received it from CN.
 
It's possible that the CN offer may spark a bidding war between the two Canadian concerns for KCS.
 
KCS last year was the target of a US$20 billion takeover bid from private equity firms Blackstone Group and Global Infrastructure Partners.
 
The KCS board of directors rejected that proposal.
 
Reilly declined to discuss CN's tolerance for a bidding war for KCS.
 
"I'd like to get the ink to dry on this one first before we consider next steps," he said.
 
Like CP, CN has said that Kansas City would become the U.S. headquarters of the merged company.
 
KCS employs about 700 people in the region.
 
CP's current U.S. headquarters is in Minneapolis, while CN's is near Chicago.
 
Reilly said he expected Kansas City could benefit from the CN acquisition as he sees the transaction as an opportunity to grow the company in ways that are not built on cost-cutting or job reductions.
 
"I would just emphasize that we made the commitment on the Kansas City headquarters," Reilly said.
 
"We also see it beyond that as an opportunity to grow the business in Kansas City, which could spur business there with our reach from coast to coast."
 
Steve Vockrodt.