NEW YORK -- Canadian Pacific has upped its offer for Kansas City Southern to approximately $31 billion, reigniting a bidding war with rival railroad Canadian National.

       Kansas City Southern is the smallest of the remaining major U.S. railroads, but it also controls critical cross-border routes with Mexico.

       Its size has long piqued the interest of other railroads as any bid could be the most likely to be approved by U.S. antitrust regulators long wary of signing off on railroad mergers.

       But its cross-border rails give Kansas City a high premium in the eyes of bigger railroads hungry to expand, particularly now as the U.S. economy is emerging from a pandemic-induced recession and demand for goods has snarled supply chains.

       Canadian National, based in Montreal, Quebec, looked as though it would take ownership of Kansas City Southern with a $33.6 billion takeover bid in May when Canadian Pacific, almost 3,700 kilometers (2,281 miles) to the west in Calgary, Alberta, refused to increase its own $25 billion bid. Canadian Pacific has urged shareholders of Kansas City Southern to reject the higher bid from Canadian National because, it says, it faces a tougher antitrust fight with regulators who will also consider the potential for increased rail congestion around Chicago.

       On Tuesday Canadian Pacific said its new proposal now has terms similar to those in Canadian National’s offer but that its bid provides “significantly higher regulatory certainty.”

       Canadian Pacific said Tuesday that its cash-and-stock proposal includes 2.884 Canadian Pacific common shares and $90 in cash for each share of Kansas City Southern stock held. It also includes the assumption of $3.8 billion of outstanding Kansas City Southern debt. The bid values Kansas City Southern at $300 per share.

       According to documents filed with the Securities and Exchange Commission last month, Kansas City Southern began talks of a potential takeover last summer when an unnamed group of investors first offered to buy the railroad for $195 cash per share. The railroad continued to negotiate with those investors, and also Canadian Pacific, all of last year and in to 2021.

       After several rounds of rising bids, Kansas City announced a merger agreement in March with Canadian Pacific that put the railroad’s value at $275 per share.

       However, rival Canadian National tried to break up that deal with an offer valuing Kansas City Southern at roughly $325 per share.

       Canadian National appeared to have won the bidding war in May when it sweetened the offer to include more of its stock and vowed to cover any breakup fee that Kansas City Southern would have to pay for walking away from the agreement with Canadian Pacific.

       The bid Tuesday from Canadian Pacific Railway Ltd. may upend that story.

       Canadian National on Tuesday said that its offer is still superior. Kansas City Southern did not immediately respond to a request for comment from The Associated Press.

       Shares of Kansas City Southern jumped more than 7% at the opening bell and Canadian National Railway Co. rose slightly. Shares of Canadian Pacific slipped.