Canadian Pacific (CP) has agreed to buy Kansas City Southern (KSU) for around $25 billion, after discounting $3.8 billion in KCS debt that Canadian Pacific will assume. It would bring together two of the fastest-growing rail companies in the sector at a time when internet sales are surging, clogging ports and delaying shipments. In a joint statement, the companies said the transaction will help them become more competitive. As the USMCA (the new NAFTA trade agreement between the United States, Canada, and Mexico) takes hold, this could become increasingly relevant. The united corporation would run 20,000 miles of rail, employ over 20,000 employees, and generate $8.7 billion in yearly revenue. “The new competition we will inject into the North American transportation market cannot come soon enough,” said Canadian Pacific CEO Keith Creel in a statement. “The new USMCA Trade Agreement between these three countries makes the efficient integration of the continent’s supply chains more important than ever before.” If the agreement is finalized, the rail companies’ networks will be linked in Kansas City, Missouri, offering customers access to Canada, the United States Midwest, the United States Northeast, the United States South Central, and Mexico. By allowing some freight to remain on the same car, the interchange point in Kansas City might remove a roadblock, speeding up shipments. Currently, freight being delivered from one competitor’s network to another may need to be transferred to a new vehicle to continue its route. Continue reading Despite the high purchase price, the united business, to be known as Canadian Pacific Kansas City, would not rise to the top of the top-tier railroad rankings: It would stay at No. 6 in terms of revenue in the United States. Despite this, the corporations are anticipating a possible antitrust battle. Because the two joining firms serve distinct geographies, they highlighted in their joint statement that the acquisition would not eliminate independent railroad competitors from the market. The arrangement would need to be approved by the US Surface Transportation Board first. According to the corporations, this might happen in the middle of 2022. Continue reading
