North America’s Largest Railroad Born As Kansas City Sale Ends
Rail giant Canadian Pacific (CP) has reached a US $ 31 billion deal including the assumption of $ 3.8 billion in debt for The US Kansas City Southern Railway (KCS) on Tuesday, a sale initially agreed to in September.
The historic agreement creates Canadian Pacific Kansas City (CPKC), an approximately 32,000 kilometer railway that connects Canada, the United States and Mexico and will generate approximately $ 8.7 billion annually.
CPKC will provide a direct service between Vancouver, Montreal, New York, Texas and much of Mexico, currently operated by KCS ‘wholly owned subsidiary, Kansas City Southern de México, which carries cargo from the Pacific port of Lázaro Cárdenas, Michoacán; the ports of Tampico and Altamira in Tamaulipas; the port of Veracruz; and the Valley of Mexico and the industrial region of El Bajío to the United States via Texas.
The combination will capitalize on the North American Trade Agreement (USMCA), particularly in the auto and agricultural sectors, which together represent nearly $ 190 billion, according to the Economics Department.
However, the deal is not quite finalized yet: KCS shares have been placed in a voting trust while US regulators review it. The companies await approval in the fourth quarter of 2022 and will operate independently until then.
The acquisition received the green light from Mexican regulators in November.
The completion will end a bidding war between CP and its Canadian rival, Canadian National (CN), which was previously on the verge of taking control of KCS.
CP Chairman Keith Creel said the deal would benefit North American economies: “Today is a historic day for our two emblematic companies… CPKC will become the backbone connecting our customers to new markets, enhancing competition on the US rail network and driving economic growth in North America while delivering significant environmental benefits, ”he said.
KCS Chairman Patrick Ottensmeyer said the deal will benefit customers, shareholders and workers: but will also benefit KCS and our employees by allowing us to be part of a growing company on the market. North American continent, ”he said.
CP began operating in 1881 and owns approximately 20,100 kilometers of railroad in the United States and Canada.
KCS is the smallest of the major freight railways in the United States, with 10,800 kilometers of track in the United States and Mexico.