Canadian Pacific Railway Ltd. agreed to acquire Kansas City Southern in a merger worth approximately $ 25 billion, creating the first freight rail network connecting Mexico, the US and Canada.
The companies said on Sunday that their boards have agreed to a deal that values Kansas City at $ 275 per share in a combination of cash and stock. Kansas City investors will receive 0.489 of a Canadian Pacific share and $ 90 in cash for each Kansas City common stock.
If approved by regulatory agencies, the deal would unite two of the major North American freight carriers, link factories and ports in Mexico, farms and factories in the Midwestern US, and the ocean ports and energy resources of Canada.
The transaction requires the approval of the US Surface Transportation Board, which requires major railroads to demonstrate that they are operating in the public interest by enhancing competition. The merger partners said they expect the STB review to be completed by mid-2022.
The combined company, rebranded as Canadian Pacific Kansas City, is said to have annual sales of approximately $ 8.7 billion and employ nearly 20,000 people. It would be headed by Keith Creel, CEO of the Canadian Pacific. Kansas City investors would own approximately 25% of the shares of the combined entity.