KCS, for the better part of 20 years, tried desperately to position themselves for a takeover, with the most likely (and most interested) target being BNSF. But that never happened. So they went off, did their own thing, and have made an astonishing amount of money at is. And, right now, I'm sure every other Class I is kicking themselves for not taking it -- least of all BNSF.
KCS is still an attractive partner for BNSF. However, I think that the pricetag may be more than Warren's willing to part with. The stock price already heavily values the predicted future earnings, and it's current price is about double what the railroad is really worth today. And a buyer would have to throw in a premium on top of that -- $16B or so for KSU is a ton of money when Warren bought the entirety of BNSF for about 2.5x that. If he'd bought them 5 years ago, he could've gotten a steal. And sure, 30 years ago he could've gotten it for mere millions -- but it was never thought of as a good option then. 5 years ago the pricetag would've been probaly 1/10th what it would be now, with a much more viable and foreseeable outlook that should've been taken advantage of then.
UP obviously has the funds to do it, but would likely face significantly higher hurdles with the NTSB than BNSF would. Partly because it'd be Berkshire buying it, not BNSF technically. And also because the last UP merger kinda ******** up the rail network in Texas really good. With UP then having a full stranglehold over the Houston area refineries, significant access rights would have to be granted to the BNSF. Additionally, as KCS hauls a not-insignificant amount of BNSF coal, BNSF would likely petition for guaranteed access on the KCS mainline to guarantee energy service to its customers -- again, mostly in Texas which would likely side with BNSF after the cluster of the last UP merger. UP would also undoubtedly be concerned with triggering another merger war, not for KCS, but for other railroads and UP wouldn't want to find itself cash poor or its' stockholders not interested in another immediate merger (nor would it likely get approval). UP does not want to end up on the tail end of a potential merger between BNSF and NS, and find itself stuck with CSX. I think if anyone's gonna 'shoot first' when it comes to mergers, it's going to be for NS -- not wasting their shot on KCS.
The Canadians certainly have a compelling reason to be interested, but I think they've sat back so long waiting that it's now priced outside anything they'd be interested in for traffic that doesn't particularly benefit their existing core railroads. KCS tried unsuccessfully to get a good partnership going there with its "NAFTA Railway" plan. If things didn't work out there, not sure how well they'd work out with an official purchase. But, clearly, a CN merger makes sense. Politically, I could see some nationalism issues, what with a Canadian company owning what would likely eventually become a major backbone of North American industry over the coming decades.
