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A Canadian Pacific Railway employee walks along the side of a locomotive in a marshalling yard in Calgary on May 16, 2012.Jeff McIntosh/The Canadian Press

Canadian Pacific Railway Ltd. is set to raise its offer for Kansas City Southern , The Wall Street Journal reported, a move that could touch off a fresh bidding war with Canadian National Railway Co .

CP’s new offer, which could come as early as Tuesday, values the U.S. railway at US$27-billion, or about US$300 a share, The Wall Street Journal reported, citing sources it did not name.

Missouri-based KCS agreed in May to CN’s cash and stock takeover worth an announced US$29.8-billion, or US$325 a share, ending a US$25.2-billion deal in cash and stock that CP and KCS reached in March. KCS paid US$700-million to CP to terminate the deal.

The CN takeover requires approval of KCS shareholders in an Aug. 19 vote, and approval by regulators in the United States and Mexico. Additionally, CN and KCS must win approval from the U.S. Surface Transportation Board for the voting trust that will own and operate KCS shares while awaiting STB approval for the deal itself.

KCS shares rose to US$285 in after-hours trading on Monday.

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CP spokesman Patrick Waldron and KCS spokeswoman Doniele Carlson declined to comment. A spokesperson for CN did not immediately respond to e-mails.

Voting trusts are a structure used in some U.S. takeovers that ensures the operational viability and independence of the target company during the regulatory review period, which can last more than a year.

CP’s voting trust has already received approval from the STB, which CP has said gives its cheaper bid greater certainty of winning STB approval. Keith Creel, CP’s chief executive officer, has said the Calgary railway did not want to amass the debt required to get into a bidding war with CN.

CN, which has a larger network in the U.S. than that of CP, is expected to face closer antitrust scrutiny before the regulator. A combined CP-KCS, on the other hand, would remain the smallest of the large North American railways.

The driver of the high-stakes battle for KCS is a chance to form a truly North American rail network that links three countries and can move autos, grain and shipping containers at a time trade is rebounding. KCS operates an 11,400-kilometre network that begins in Springfield, Ill., and extends south through Mexico, reaching ports on the Atlantic and Pacific coasts.

CN is Canada’s largest railway, with 24,500 employees and 32,000 kilometres of track in Canada and the U.S. CP’s network stretches 21,000 km, with 12,000 employees.

Both Canadian railways covet KCS for its ability to offer customers single-line service with fewer of the delays that arise when rail carriers hand over trains at junctions.

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