© Reuters. A KCS Railway Company freight train wagon is pictured in Toluca
(Reuters) – Canadian Pacific (NYSE 🙂 Railway Ltd announced on Sunday that it had agreed to buy Kansas City Southern (NYSE 🙂 for $ 25 billion in a cash-and-stock deal to provide the first rail network between the USA, Mexico and Canada to create.
Kansas City Southern shareholders will receive 0.489 shares in the Canadian Pacific and $ 90 in cash for each KCS common share held, the companies said in a joint statement.
The deal comes under expectations of US-Mexico trade picking up after Joe Biden replaced Donald Trump as US President, the report said.
The Kansas City Southern board of directors has approved the offer, and the two companies have informally informed the US Surface Transportation Board, whose approval will be required for the deal.
The Financial Times first reported on the deal on Sunday.
Canadian Pacific, based in Calgary, is Canada's second largest rail operator behind Canadian National Railway Co Ltd with a market value of $ 50.6 billion.
It owns and operates a transcontinental rail freight company in Canada and the United States. Grain transportation is the company's biggest revenue driver, accounting for about 58% of bulk revenue and about 24% of total freight revenue in 2020.
Kansas City Southern has national and international rail operations in North America and focuses on the North / South Freight Corridor that connects commercial and industrial markets in the central United States with industrial cities in Mexico.
Attempts by Canadian railroad companies to buy US railroad companies have met with limited success due to antitrust concerns.
Canadian Pacific's most recent attempt to expand its US business comes after a hostile takeover bid of $ 28.4 billion was rejected Norfolk Southern Corp (NYSE 🙂 in April 2016. The merger talks between Canadian Pacific and CSX Corp (NASDAQ :), which have a large network in the eastern United States, failed in 2014.
An offer by the Canadian National Railway Co, the country's largest railroad, to purchase Burlington Northern Santa Fe owned by Warren Buffett was blocked by US antitrust authorities in 1999-2000.
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