CN Rail Moves Up 5% On Rumors Of CP Rail Sale

Shares in Canadian National Railway Company (CNI) were up more than 5% Wednesday morning, following news rumors that CN's rival, Canadian Pacific Railway Ltd. (CP) has become the target of a leveraged buyout bid from a private equity consortium led by Brookfield Asset Management Inc. (BAM).

Trading in CP Rail was halted early Wednesday morning pending an announcement from the company regarding the possible bid. CN Rail investors are presumably driving up the stock thinking that the company will be next on the block, should the Brookfield-led bid for CP Rail go through.

However, they may want to consider the fact that unlike CP, CN is subject to a 15% ownership restriction for any one owner under the CN Commercialization Act, which would make it difficult for potential bidders to get a deal done.