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KSU - Canadian Pacific: Kansas City Southern Is Not Worth $25 Billion
Kansas City Southern
It wouldn't be unreasonable to characterize Kansas City Southern's growth over the past several years as "indolent."
In spite of this, Canadian Pacific is willing to spend $25 billion of owner capital to acquire it in a deal that would generate a yield of ~2.4%.
Given the risk inherent in combinations, I require a yield of ~6% for such mergers. It's virtually impossible for the revenue gains and savings to reach that hurdle rate.