The new bid comes ahead of a vote on Aug. 19 by Kansas City Southern shareholders on a rival offer by Canadian National Railway Co. valued at US$33.6 billion.
However, CP Rail says its offer is more likely to be approved by U.S. regulators.
Under its new offer, KCS shareholders would receive 2.884 CP Rail shares and US$90 in cash for each common share held, representing a value of about US$300 per share.
The bid is up from an earlier offer valued at US$275 per share.
The CN proposal would see KCS shareholders will receive US$200 in cash and 1.129 CN shares for each share in a offer valued at about US$325 per share.
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