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Canadian Pacific Railway Ltd. has agreed to acquire Kansas City Southern in a merger valued at approximately $ 25 billion that would create the first freight rail network linking Mexico, the United States and Canada.
The companies said Sunday that their boards of directors had agreed to a deal that values Kansas City at $ 275 a share in a combination of cash and stocks. Kansas City investors will receive 0.489 Canadian Pacific shares and $ 90 in cash for each Kansas City common share held.
If approved by regulators, the deal would unite two of North America’s major freight carriers, connecting factories and ports in Mexico, farms and factories in the US Midwest, and seaports and energy resources in Canada. .
The transaction will need to be approved by the US Surface Transportation Board, which requires major railroads to demonstrate that they are operating in the public interest by increasing competition. The merger partners have said they expect the STB’s review to be completed by mid-2022.
The merged company, which will be renamed Canadian Pacific Kansas City, is estimated to have annual sales of approximately $ 8.7 billion and employ nearly 20,000 people. It would be headed by CEO of Canadian Pacific, Keith Creel. Kansas City investors are said to own about 25% of the shares of the combined entity.
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