I think it is time to try this again .. from my May 6, 2010 post:
A "game" that I have sometimes "played" is to put myself in Mr. Haverty's shoes and contemplate the next strategic move for KCS.
Mr. Haverty (born June 11, 1944) experienced, insightful, hardened, a strategic long term disciplined visionary, with no obvious and equally capable successor in the wings, probably has about three more years in the "chair".
I assume that for the short term every move will serve a dual purpose. Increase the financial security of KCS but, don't undertake any projects which would inhibit the value of KCS as an acquisition.
So, for example I think the mini hump at Shreveport, though necessary for an independent KCS could be redundant for a potential acquiror. Therefore a no-go.
However, a bypass around Victoria, Tx and thereby accessing the Victoria Barge Channel and potentially new trackage from Victoria to Alice might be worthwhile.
Brownsville-Matamoros bridge while avoiding any chance of UP being a bridge carrier between the Brownsville Channel and KCSM -- high priority.
Strategic and quiet lobbying for favorable positioning with I-69 rail corridor (The Trans Texas Corridor) definitely important.
Two years of paying down debt to say the $1.2B level, and ensuring the independence of KCS by supplementing a less capable successor by further augmenting Mr. Erdman's role, and reinitiating a dividend of perhaps $.80 annaully. Worth thinking about.
I think there is a "black swan" swimming around
The ICE & DME owned by CP rail is more advantageous as a KCS holding. It extends the potential "length of haul". But, I don't think EHH gives it up, at least not in worthwhile chunks to any competitor. So, will some sort of strategic alliance or merger between CP and KCS become the alternative? Now that KCS has restructured its debt and is churning out respectable profits and free cash flow -- something might be workable.
BNSF owns a significant chunk of the Tongue River Railroad (35% I recall) and that will give them another entry into the Powder River Basin if, that is ever required. It also makes the DM&E less attractive.
KCS does not own the trackage in Mexico -- it is a concession that is 50% lapsed through its first renewable term. How eager is any NA railroad going to be to pay a premium for a concession as opposed to an ownership. Especially a concession whose terms of exclusivity of trackage rights can be adjusted during the second term. I don't think a takeover happens. At least not any single railroad -- the risk is too great.
I know your post is tongue in cheek, but an acquisition now at just about any real-worl premium would be a steal for Buffet at a time when Mexico momentum is just staring to build. Every metric points to Mexico taking more and more manufacturing business, in every category from China. Virtually every input cost and transportation cost are more attractive in Mexico. Plus a better labor force. Not to mention, tariff free status with the most important nations being another huge benefit. Buffet couldn't afford KSU at a fair asking price. :-)