Kansas City Southern, the Class I freight railroad much sought-after by two Canadian rivals, reported a second-quarter loss stemming in part from costs related to its impending merger.

As leaders from Canadian National Railway and Kansas City Southern Railway promote their proposed merger, concerns are growing among some of their customers.

Leaders of the rival Canadian National and Canadian Pacific railroads on May 26 made their pitches about why their respective railroads should be approved to purchase Kansas City Southern Railroad.

NEW YORK — Kansas City Southern has abandoned its agreement to be acquired by Canadian Pacific, choosing instead a competing bid from Canadian National Railway with a bigger price tag, but also greater regulatory risks.

Canadian Pacific Railway Ltd. declined to increase its offer for Kansas City Southern and urged the U.S. railroad instead to reject Canadian National Railway Co.’s higher bid because of regulatory risks.

Canadian National Railway Co.’s proposal to acquire Kansas City Southern will be judged under stricter regulations adopted in 2001, the U.S. regulator said in an expected decision that lays the ground rules for what would be the first major rail merger in more than two decades.

Canadian National Railway appears to be the front-runner to acquire Kansas City Southern Railroad after the KCS Board of Directors on May 13 declared CN has presented a “superior proposal” to an earlier offer from Canadian Pacific to purchase the U.S.-based railway.

Canadian Pacific Railway Ltd.’s chief executive officer tried to quash speculation that a bidding war is at hand for Kansas City Southern.

An epic battle is in the early stages with Class I railroad powerhouses Canadian National and Canadian Pacific competing with multibillion-dollar bids to purchase the smaller Kansas City Southern railroad.

A bidding war is breaking out for Kansas City Southern, with Canadian National Railway making a $33.7 billion cash-and-stock offer for the railway.