What happened A bidding war has erupted for control of Kansas City Southern (NYSE: KSU), and that had shares of the railroad up 14% at the open on Tuesday. So what Last month, Kansas City Southern (KCS) agreed to be acquired by Canadian Pacific Railway (NYSE: CP) in a deal worth nearly $30 billion. But Canadian National Railway (NYSE: CNI) has other ideas, and on Tuesday it announced a $33.7 billion bid for the U.S. railroad. Image source: Kansas City Southern. Both deals offer KCS holders a combination of cash and stock. But Canadian National -- in a letter to the KCS board -- notes its proposal is 21% higher than where the stocks were trading at the close on Monday, and offers a full $200 per share in cash. "Our proposal clearly provides superior value to the proposed transaction with [Canadian Pacific], including greater value certainty for your shareholders given the significantly greater upfront cash consideration," Canadian National CEO Jean-Jacques Ruest wrote in the letter. Now what Kansas City Southern shares are jumping on the assumption that even if the railroad decides to stay with Canadian Pacific, it is going to have to up its offer to get a deal done. The hope is that the two Canadian giants will get into a bidding war and the offer will go higher in the weeks to come. While investors have every reason to be excited, some caution is in order. Any transaction is going to come under heavy regulatory scrutiny, and a plan put forth by Canadian Pacific to eliminate some of the regulatory risk to KCS shareholders -- and which Canadian National said it will honor -- has come under fire from regulators. Even if a deal eventually gets done, there is no guarantee of a quick payday for Kansas City Southern shareholders. KCS is a well-run company that suddenly has a lot of options. For investors already on board, sit back and enjoy the ride. But I'd be cautious about jumping in right now based on the assumption of a dramatic increase in the offer price in the weeks to come. 10 stocks we like better than Kansas City SouthernWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Kansas City Southern wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool has a disclosure policy.Source