Canadian Pacific Railway agreed to acquire Kansas City Southern in a merger valued at about US$25 billion that would create the first freight-rail network linking Mexico, the US, and Canada, reported The Wall Street Journal.
The companies announced on Sunday, March 21, their boards agreed to a deal that values Kansas City at US$275 a share in a combination of cash and stock. Kansas City investors will receive 0.489 of a Canadian Pacific share and US$90 in cash for each Kansas City common share held.
If approved by regulators, the deal would unite two of the major North American freight carriers, linking factories and ports in Mexico, farms and plants in the midwestern US, and Canada’s ocean ports and energy resources.
The transaction will need approval from the US Surface Transportation Board, which requires major railroad combinations to demonstrate they are operating in the public interest by enhancing competition. The merger partners said they expect the STB review to be completed by the middle of 2022.
The combined company, to be renamed Canadian Pacific Kansas City, would have about US$8.7 billion in annual revenue and employ nearly 20,000 people.
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