My tweet, with trembling hands: Boy I sure didn’t see this coming (mea culpa); and during “March
Madness”! The FT reports that CP has agreed to buy KSU for $25B and has notified the US regulatory
body, the STB. My guess is that, despite what I have thought was a more “interventionist” stance, STB
approval is likely as there is little to no overlap – and this is the only merger that – by itself, as a standalone
- might not trigger full rail consolidation, as any other pairing likely would. That would be more
problematic….This, if (real, and) allowed, would give CP, like CNI, three-coast access. I admit I actually
checked the calendar to make sure that it wasn’t midnight, April 1st. It is not….And, I thought the hoops were exciting!
From the FT, hopefully with their permission (there is nothing on either railway’s website as of
Midnight):
Canadian Pacific to buy Kansas City Southern for $25bn
Acquisition of railroad group for $275 per share would be the largest deal of 2021. The deal by the Calgary-based company comes as US-Mexico trade is expected to pick up following the election win of Joe Biden
James Fontanella-Khan in New York and Arash Massoudi in London AN HOUR AGO.
Canadian Pacific has agreed to buy Kansas City Southern for $25bn, in what would the largest deal of the
year, according to people with knowledge of the matter. The Calgary-based railroad company has
offered to buy the US freight group for $275 per share in a cash and stock offer. CP’s proposal
represents a 23 percent premium on Kansas City Southern’s closing stock price on Friday. Kansas City
Southern’s board has approved the bid. The two companies informally informed the Surface
Transportation Board, the US regulator, about the deal on Saturday evening, said people informed about
the matter. The acquisition will need to be approved by the STB. The transaction is expected to be
announced on Sunday, said the people with knowledge of the matter.
The deal comes as US-Mexico trade is expected to pick up following the victory of Joe Biden in the 2020
US presidential elections against Donald Trump. Kansas City Southern’s network runs from the US
Midwest to ports on Mexico’s east and west coasts. CP declined to comment. Kansas City Southern did
not respond to a request for comment. The US company a takeover bid from Global Infrastructure
Partners and Blackstone Group last year valued the US railway group at $21bn. Shares of Kansas
City Southern have more than doubled in the past 12 months. The railway sector was hit hard in the
early phase of the pandemic because of restrictions imposed by the US government to contain the
spread of the coronavirus. But over recent months, the industry’s prospects have improved markedly as
the US accelerated its rollout of vaccines and business activity picked up considerably. Biden’s moves to
strengthen US-Mexico trade relations are expected to further boost railway activity
Anthony B. Hatch
abh consulting
http://www.abhatchconsulting.com
abh18@mindspring.com
Twitter @ABHatch18