Pacific Railway Ltd., a historic Canadian Class I railway incorporated back in the 1881s, said late on Sunday that the Calgary-based railway operator - widely dubbed as CP Rail – had agreed to a breakthrough $25-billion cash-and-stock takeover deal for Kansas City Southern what in effect would create the first railway network tethering the US, Mexico and Canada, branding a landmark move which many industry analysts contemplated as a big bet on an uptick in N.
American trade. Aside from that, under the financial terms of the deal, Kansas City Southern (KCS) shareholders would receive 0.489 of a Canadian Pacific share alongside $90 in cash for each KCS common shares they were holding, while the deal would value Kansas City Southern shares at $275 apiece, representing a 23 per cent premium of KCS’s Friday’s closing price, KCS and CP Rail had unveiled in a joint statement.
In tandem, latest CP Rail move to purchase KCS in a cash-and-stock deal would value the Delaware-registered US railway holding company at a stark upsum of $29 billion, creating the first railroad that would fetter the United States, Canada and Mexico while offering a single cohesive-rail-system bridging a raft of ports on the US Gulf, Pacific, and Atlantic coasts with overseas markets.
Canada’s CP Rail to purchase KCP at $25bn cash-and-stock deal
Nonetheless, previous attempts of Canadian railroad operators to purchase US rail companies had seen limited success thus far as US STB (Surface Transporation Board) had always been a major stumbling block on prior buyout attempts, however, US STB is expected to complete a review of the deal by mid-2022.
Meanwhile, addressing to the momentous merger deal between KCP and CP Rail, the biggest takeover accord ever between two rail companies, Pacific Chief Executive Keith Creel said in an interview following the announcement, “I’m not going to speculate about the STB rejecting,” adding he was expecting STB regulators to approve the merger.