CP and KCS join forces to create the 1st rail network that will connect Mexico-United States and Canada

Canadian Pacific Railway Limited (CP) and Kansas City Southern (KCS) announced an agreement to combine and create the first rail network that will connect the United States, Mexico and Canada. 

Joining seamlessly in Kansas City, Mo. , in the heart of America, CP and KCS will connect customers through single network transportation offerings between points in the CP system throughout Canada, the Midwest and the northeastern US, as well as points in the KCS  system throughout Mexico and the south-central part of the neighboring country.

The new single-line offerings from the combined network will provide dramatically expanded market reach for customers served by both companies; in this way, they will provide new options for competitive transportation services and support the economic growth of North America. 

In the merger agreement it was agreed that CP will acquire KCS in a stock and cash transaction representing a value of approximately $ 29 billion, which includes $ 3.8 billion of  outstanding debt from KCS .

JOB CREATION

Also, the transaction is expected to create jobs across the combined network. Additionally, efficiency and service improvements are projected to achieve significant environmental benefits.

While it will remain the smallest of America's six Class 1 railroads, in terms of revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 rail miles , employing about 20,000 people, and will generate total revenue of approximately 8.7 billion based on actual 2020 figures.

With this, relations will be strengthened and the opportunities of the Treaty will be promoted in Mexico, the United States and Canada (T-MEC).

A POSITIVE IMPACT

" This transaction will be transformative for North America , providing positive impacts for our respective employees, customers, communities and shareholders," said Keith Creel, president and CEO of CP. 

For his part, Patrick J. Ottensmeyer, president and CEO of KCS, said the company has long prided itself on being the most customer-friendly transportation provider in North America. And by combining with Canadian Pacific , customers will have access to new single-line transportation services that will provide the best value for their transportation dollar and a strong competitive alternative to the larger Class 1s. 

"The cultures of our companies are aligned and rooted in the highest standards of safety, service and performance," he said.