Canadian Pacific Railways Ltd. has inked a $25-billion deal to acquire Kansas City Southern, according to Bloomberg.

  • Under the deal, investors of Kansas City Southern will receive 0.489 of a Canadian Pacific share and $90 in cash for each share they hold. This values the U.S. railroad’s stock at $275 apiece. It is the biggest Canadian purchase of a U.S. asset since 2016.
  • The merger will create a 20,000-mile T-shaped network. It will give Canadian Pacific access to Kansas City’s Midwestern rail system connecting farms in Kansas and Missouri to ports along the Gulf of Mexico.
  • Canadian Pacific will also penetrate Mexico which accounted for nearly half of Kansas City Southern’s 2020 revenues. It will benefit from 16 automotive factories along its tracks.
  • The deal is being spearheaded by Canadian Pacific chief executive officer Keith Creel, following the footsteps of Hunter Harrison who died in 2017.
  • Harrison, whose efficiency strategy became the standard at all the major North American railroads, previously tried to push the merger but failed.
  • Kansas City Southern jumped 17% to $262.25 before the start of regular trading on Monday. It is on track for its biggest closing gain since last March.