Canadian Pacific Railway has said it has agreed to purchase Kansas City Southern for $25 billion in a cash-and-shares deal.
In a joint statement, the companies said Kansas City Southern’s shareholders will receive 0.489 of a Canadian Pacific share and $90 in cash for every KCS common share held.
The deal has an enterprise value of $29 billion including debt and it values Kansas City Southern at $275 per share, representing a 23% premium to recent closing price of $224.16.
In a statement, Canadian Pacific Chief Executive Keith Creel said: “The new competition we will inject into the North American transportation market cannot happen soon enough, as the new USMCA Trade Agreement among these three countries makes the efficient integration of the continent’s supply chains more important than ever before. This will create the first U.S.-Mexico-Canada railroad.”
The bid has been approved by Kansas City Southern’s board and both companies have notified the U.S. Surface Transportation Board in a bid to seek the agency’s required approval.
