KANSAS CITY, Mo. — Kansas City Southern announced Sunday that it has agreed to sell to Canadian Pacific Railway, creating the first rail network though Canada, the U.S. and Mexico.
Following the merger, common shareholders of Kansas City Southern will receive 0.489 of a Canadian Pacific share and $90 in cash for each Kansas City Southern common share held, giving Kansas City Southern shareholders ownership of 25% of Canadian Pacific’s outstanding stock.
The combined network’s new single-line offerings will deliver expanded market reach for
customers served by CP and KCS, provide new competitive transportation service options, and support North American economic growth, according to a release. The transaction is also expected to create jobs across the combined network.
While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion based on 2020 actual revenues, according to a release.
The new company will be called Canadian Pacific Kansas City, with four KC Southern directors joining an expanded board.
“This transaction will be transformative for North America, providing significant positive impacts for our respective employees, customers, communities, and shareholders,” said CP President and Chief Executive Officer Keith Creel. “This will create the first U.S.-Mexico-Canada railroad, bringing together two railroads that have been keenly focused on providing quality service to their customers to unlock the full potential of their networks. CP and KCS have been the two best performing Class 1 railroads for the past three years on a revenue growth basis.”
Kansas City Mayor Quinton Lucas tweeted Sunday morning following the announcement.
“Kansas City Southern has been a vital part of the business and cultural fabric of Kansas City since the 1880s, proudly sharing our name as leaders in international trade. We stand with their employees and leadership as we enter the next potential phase of a great Kansas City firm.”