CP Says it Will Acquire Kansas City Southern

Canadian Pacific plans to buy Kansas City Southern, a deal that if approved by regulators would reduce the number of Class 1 railroads in North American to six.

The cash and stock transaction was said to be worth $29 billion. CP said the transaction has the approval of the boards of directors of both companies.

CP will reportedly pay KCSX shareholders $275 per share, representing a 23 percent premium on KCS’s closing stock price on Friday.

In a statement, CP CEO Keith Creel said the transaction will create the first U.S.-Mexico-Canada railroad.

KCS and CP currently connect at just one point, Kansas City, Missouri. The combined system would have 16,400 miles of track but actually operate over 20,000 miles when trackage and haulage rights are included.

It will employ 20,000 people and be the smallest Class I U.S. railroads by revenue, generating revenue of about $8.7 billion.

The acquisition must be approved by the U.S. Surface Transportation Board.

CP is expected to create in the second half of 2021 an independent voting trust to acquire the KCS shares.

Regulatory approval is not expected to come until mid 2022.

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