Congratulations to The Arora Report subscribers holding Kansas City Southern (KSU). KSU is a major railroad. The Arora Report had previously given buy signals on KSU and identified it as a buyout candidate. Our target zone started at $270. KSU has received a $275 offer from Canadian Pacific (CP).
KSU becomes the 163rd Arora Report Portfolio company to be bought out producing a fortune for long-time subscribers. This performance is better than services that focus only on buyouts and charge over $50,000 per year.
At $275 the gain is 62.7%.
The offer consists of $90 in cash and 0.489 CP shares. Here are the key points:
- Expect the stock to trade lower because hot money in the stock will sell on the news.
- Final approval is needed by the Surface Transportation Board. This is a risk.
- Other bidders are unlikely as CP has substantial synergies with KSU and other bidders will have difficulty offering higher than $275 at this time.
- In the long run, this is a positive for CP and CP shares.
- The combined railroad will cover all the way from Canada to Mexico.
What To Do Now
It is a matter of personal preference to take full profits, partial profits or continue to hold. In general, small accounts may want to consider selling and large accounts may want to take partial profits and hold the rest.
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