Canadian Pacific Railway Ltd. agreed to acquire Kansas City Southern in a merger valued at about $25 billion that would create the first freight-rail network linking Mexico, the U.S. and Canada.
The companies said Sunday their boards agreed to a deal that values Kansas City at $275 a share in a combination of cash and stock. Kansas City investors will receive 0.489 of a Canadian Pacific share and $90 in cash for each Kansas City common share held.
If approved by regulators, the deal would unite two of the major North American freight carriers, linking factories and ports in Mexico, farms and plants in the midwestern U.S. and Canada’s ocean ports and energy resources.
The transaction will need approval from the U.S. Surface Transportation Board, which requires major railroad combinations to demonstrate they are operating in the public interest by enhancing competition. The merger partners said they expect the STB review to be completed by the middle of 2022.
The combined company, to be renamed Canadian Pacific Kansas City, would have about $8.7 billion in annual revenue and employ nearly 20,000 people. It would be run by Canadian Pacific CEO Keith Creel. Kansas City investors would own about 25% of the combined entity’s shares.