Canadian Pacific Railway to acquire Kansas City Southern for USD 25 Bn

By Akshay Kedari  Date: 2021-03-22

Canadian Pacific Railway to acquire Kansas City Southern for USD 25 Bn

Canadian Pacific Railway Ltd. has reportedly agreed to buy Kansas City Southern for USD 25 billion, to establish a 20,000-mile rail network across the United States, Canada, Mexico, in hopes of benefitting from an uptrend in trade.

It is worth mentioning that it will be the biggest ever merger of North American railways by transaction value. This comes along the heels of the ratification of the USMCA (U.S.-Mexico-Canada Agreement) last year, which eliminated the threat of trade tensions that had intensified under former U.S. President Donald Trump.

The acquisition will bode well for the recovery of supply chains disrupted by the COVID-19 pandemic.

Keith Creel, CP Chief Executive reportedly said that this network uniquely offers a supply chain that helps their customers and partners to truly profit from and maximize that opportunity.

The two companies are positive about obtaining the approval of the U.S. Surface Transportation Board (STB) by the middle of 2022, as the agreement would merge the smallest of the seven Class I railways in the United States, which meet in Kansas City and have no overlap in their routes.

Reliable sources stated that in 2001, the STB amended its merger regulations to enable Class I railways to demonstrate a deal in the public interest. However, owing to Kansas City Sothern’s limited scale, it was granted an exception, potentially reducing the amount of scrutiny that the acquisition would face.

If the STB rejects the merger, Canadian Pacific will have to sell Kansas City Sothern’s stock, which could be sold to private equity firms or relisted on the stock market, sources cited.

If Canadian Pacific fails to complete the formation of the independent voting trust for Kansas City Southern shares, it will have to pay Kansas City Southern a USD1 billion reverse breakup charge, according to a credible source.

The total deal size, including debt, is valued at USD 29 billion, sources confirmed.

Source Credit –

https://www.reuters.com/article/us-kansas-city-southern-m-a-canadian-pac/canadian-pacific-to-buy-kansas-city-southern-in-25-billion-railway-bet-on-trade-idUSKBN2BD02B

 

About Author

Akshay Kedari     aeresearch.net

Akshay Kedari

A qualified computer engineering graduate, Akshay Kedari takes pride in having his way with words. Following his passion for content creation, he writes insightful pieces on aeresearch.net and a few other portals. Also endorsed with a short-term experience in web deve...

Read More

More News By Akshay Kedari

Audi unveils the A6 e-Tron concept with 700 km range and 800 Nm torque

Audi unveils the A6 e-Tron concept with 700 km range and 800 Nm torque

By Akshay Kedari

Audi AG, a German multinational auto manufacturer of luxury vehicles has unveiled the A6 e-Tron concept which is soon likely to be made available globally. The production version which is expected to have a range of 700 km (more than 400 miles) is to...

Nissan plots revival plans in China with new hybrid and electric models

Nissan plots revival plans in China with new hybrid and electric models

By Akshay Kedari

Nissan Motor Co., a Japanese multinational automaker, is reportedly planning to launch its ‘must-succeed’ car model while revealing its green-car strategy at the Shanghai auto show in China. The new car model is a redesigned version of N...

Televisa and Univision announce merger; launch a Spanish media company

Televisa and Univision announce merger; launch a Spanish media company

By Akshay Kedari

The collaboration is aimed at expanding the video streaming portfolio in Spanish-speaking markets. Television Univision has raised USD 1 billion in a Series C funding round led by SoftBank Group Corporation. In recent developments, Mexican broad...

Klevu launches Discovery Suite to boost online retail conversion rates

Klevu launches Discovery Suite to boost online retail conversion rates

By Akshay Kedari

Klevu Oy, a leading provider of AI-based search technologies for online retailers, has reportedly launched a comprehensive solution called Discovery Suite that can allow brands to capture shoppers’ intent in order to improve their conversion ra...

SK Group acquires 16.3% stake in VinCommerce for USD 410 million

SK Group acquires 16.3% stake in VinCommerce for USD 410 million

By Akshay Kedari

SK Group of South Korea has purchased 16.3% of Vincommerce, Vietnams leading retail business operator, for USD 410 million in a bid to broaden its presence in the Southeast Asian region’s customer retailer sector. Sources close to the matter s...