[TORONTOSUN] Canadian Pacific Railway Ltd on Sunday said it has agreed to buy Kansas City Southern for US$25 billion in a cash-and-shares deal to create the first rail network connecting the United States, Mexico, and Canada, betting on a pick-up in North American trade.
The deal would create the first U.S.-Mexico-Canada railroad, offering a single integrated rail system connecting ports on the U.S. Gulf, Atlantic and Pacific coasts with overseas markets.
Shareholders of Kansas City Southern will receive 0.489 of a Canadian Pacific share and $90 in cash for each KCS common share held, valuing Kansas City Southern at $275 per share, a 23% premium to Friday’s closing price, the companies said in a joint statement. Including debt, the deal is valued at $29 billion.
The deal is contingent on the U.S. Surface Transportation Board (STB) blessing the transaction and Canadian railroad operators’ previous attempts to buy U.S. rail companies have met limited success.
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