Canadian Pacific Railway Limited (CP) and Kansas City Southern (KSC) have announced that they have entered into a merger agreement. Under the agreement, CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29bn, which includes the assumption of $3.8bn of outstanding KCS debt.
Following final approval from the Surface Transportation Board, the transaction will combine the two railroads to create one of the first rail networks connecting the US, Mexico, and Canada. Joining in Kansas City, Mo. CP and KCS together will connect customers via single-network transportation offerings between points on CP’s system throughout Canada, the US Midwest, and the US Northeast and points on KCS’ system throughout Mexico and the South Central US.
The combined network’s new single-line offerings will deliver expanded market reach for customers served by CP and KCS, and support North American economic growth. The transaction is also expected to create jobs across the combined network.
The combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7bn based on 2020 actual revenues.
“This will create the first US-Mexico-Canada railroad, bringing together two railroads that have been keenly focused on providing quality service to their customers to unlock the full potential of their networks. CP and KCS have been the two best performing Class 1 railroads for the past three years on a revenue growth basis,” said CP President and Chief Executive Officer Keith Creel.
Following final regulatory approval, a single integrated rail system will connect premier ports on the US Gulf, Atlantic and Pacific coasts with key overseas markets. The combination of CP and KCS networks will offer unprecedented reach via new single-line hauls across the combined company’s continent-wide network.
Source: Kansas City Southern
