Wed. Apr 21st, 2021

TORONTO (Reuters) – Canadian Pacific Railway Limited (CP) on Sunday said it would buy Kansas City Southern (KCS) for $ 25 billion in a cash-and-shares deal to build the first rail network connecting the United States, Mexico and Canada. Has agreed because it is at stake. A pick in the North American trade.

Some of the highlights of the transaction are as follows.

* The new unit will be the smallest of the six US Class 1 railroads by revenue; There is a combined operating rail network of approximately 20,000 miles (32,200 km), which is close to 20,000 people and generates a total revenue of approximately $ 8.7 billion based on 2020 actual revenue.

* The combined group will create the first rail network connecting the three countries, offering a single network link between points on the CP system in Canada, the US Midwest, and the US Northwest, and points on the KCS system throughout Mexico and South Central United. States.

* Once approved, a single integrated rail system will connect ports on the US Gulf, Atlantic and Pacific coasts with overseas markets.

* It is the largest M&A deal announced in 2021 and the largest merger of the two rail companies, although it is behind Berkshire Hathaway’s $ 26.4 billion purchase of BNSF in 2010.

* The new company will be led by current CP CEO Keith Creel and will have its global headquarters in Calgary.

* CP will issue 44.5 million new shares, raise $ 8.6 billion in debt and cash on hand to raise funds for the acquisition.

* Upon the shareholder approval of the transaction, CP will acquire the shares of KCS and place them in an independent voting trust that will keep the CPC under control from the CPC, unless the US Surface Transportation Board controls.

(Compiled by Denny Thomas; Editing by Daniel Wallis)

Copyright 2021 Thomson Reuters.

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