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

Facebook ad revenue could face more brunt over Apple’s privacy changes

Facebook ad revenue could face more brunt over Apple’s privacy changes

By Akshay Kedari

After Snap Inc. failed to reach its revenue targets last week, investors are now fearing that Facebook’s ad revenue could also be severely impacted due to Apple’s privacy changes. For those unaware, Apple’s privacy updates, which w...

Mark Zuckerberg planning to rebrand Facebook to reflect metaverse focus

Mark Zuckerberg planning to rebrand Facebook to reflect metaverse focus

By Akshay Kedari

There have been many businesses that have rebranded themselves to alter their identity with time. Following the league, social networking giant Facebook is also reportedly planning to rebrand the firm with a new name. On October 28, Chief Executive ...

Formula One teams to test second-generation biofuel during 2022 season

Formula One teams to test second-generation biofuel during 2022 season

By Akshay Kedari

The leading motorsport intends to achieve net-zero carbon status by the end of this decade. F1 has ruled out switching to an all-electric powertrain such as in Formula E. With increasing significance towards green mobility, Formula One teams are...

Apple’s iPhone 13 production may take a hit due to global chip shortage

Apple’s iPhone 13 production may take a hit due to global chip shortage

By Akshay Kedari

Apple Inc. is likely to cut down production of its iPhone 13 model by approximately 10 million units on account of the global chip shortage. The American multinational technology company was previously expected to manufacture 90 million units of the ...

Israel's GoTo Global acquires German e-moped sharing platform emmy

Israel's GoTo Global acquires German e-moped sharing platform emmy

By Akshay Kedari

Israel-based multimodal vehicle sharing services provider GoTo Global Mobility Ltd. has reportedly acquired Germany’s shared e-scooter company emmy. The acquisition will allow GoTo Global to enter the German market as well as accelerate its Eur...