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Kansas City Southern Deal: Jim Cramer Says Mexico Is the Key

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Kansas City Southern  (KSU)  said Sunday that it will accept a $27.2 billion cash-and-stock offer from Canadian Pacific. In an earlier decision, Kansas City had accepted an offer from Canada National.

Canada National has until the end of the week to match or beat Canadian Pacific's improved bid, but also needs to convince the U.S. Surface Transportation Board that it can navigate competition concerns over parallel rail lines in the central U.S. raised during the months-long battle for the rail operator.

Jim Cramer said Kansas City did great for its shareholders, and the deal creates an opportunity for Canadian Pacific in Mexico. 

Cramer said that as automakers including Ford  (F)  and General Motors  (GM)  look at returning some production to Mexico, control of the rails in the region is a potential tailwind. 

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Union Pacific is a holding in Jim Cramer's Action Alerts PLUS charitable portfolio. 

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