Canadian Railway Company to Acquire U.S. Rail Company in Strategic Deal.
In what is being described as a “transformative” move, Canadian Pacific Railway has agreed to buy United States’ Kansas City Southern for $25 billion in a cash-and-shares deal.
Posting an enterprise value of $29 billion, including debt, the deal values Kansas City Southern at $275 per share, representing a 23 percent premium to last Friday’s closing price of $224.16.
Already, Kansas City Southern’s board has given the nod to the deal, and the two companies have notified the United States Surface Transportation Board to seek the agency’s required approval.
Keith Creel, chief executive at Canadian Pacific, said in a statement, “The transaction will be transformative for North America, providing significant positive impacts for our respective employees, customers, communities, and shareholders.”
Canadian Pacific Railway’s acquisition of Kansas City Southern will create the first rail network connecting the United States, Mexico and Canada.
According to CBC reports, Creel will continue to serve as the CEO of the merged company with headquarters in Calgary, Alberta.
Canada’s rail industry operating revenue currently stands at 15.6 billion CAD, with its rail tracks stretching across 63,050 kilometres. The industry consists majorly of freight rail traffic and includes intercity passenger rail, commuter train services in three cities, and several urban light rail or metro systems.
With the deal set to be wrapped up, potential investors in the Canadian rail industry can leverage FDI Canada Forum, a platform for investors to know more about the Canadian Investment Opportunities Database and connect with decision-makers in Canada’s FDI. The virtual event will take place between May 5 – 6, 2021.