Freight Transport Groups in North America Face $25bn Merger
A major merger in rail transport is about to take place on the North American continent: The railway company Canadian Pacific Railway Ltd. is buying the railway holding company Kansas City Southern, creating for the first time a freight rail network linking Mexico, the USA and Canada. The transaction is valued at around 25 billion US dollars. The merger reflects a long-term perspective on an interconnected North American economy. The three countries are recovering at different rates from the impact of the Covid 19 pandemic on supply chains and global trade. Rail traffic, which plummeted last year, has rebounded, even as backups at California ports have delayed imports from Asia and brought some US factories to a halt. The two companies announced on Sunday that their boards had agreed on a deal that values Kansas City at $275 per share. Kansas City investors will receive 0.489 shares of Canadian Pacific stock and $90 in cash for each Kansas City common share. Kansas City is the smallest of the major rail freight operators in the US, but plays a key role in trade between the US and Mexico: its route network runs mainly along the Mexican border through Texas to Kansas City. The merger partners expect to complete the review of their transaction by the US regulatory body Surface Transportation Board (STB) by mid-2022.