U.S. Regulators Approve CP Rail’s Purchase Of Kansas City Southern

U.S. regulators have approved Canadian Pacific Railway’s (CP) $27 billion U.S. acquisition of Kansas City Southern (KSU).

The approval clears the way for CP Rail to create the only railway company that serves all of North America – the U.S., Canada and Mexico.

The U.S. Surface Transportation Board ruled that the deal is consistent with the public interest.
However, the approval comes with some conditions and restrictions.

These include an obligation to keep gateways open to other railroads, to develop a dispute resolution panel to address commuter disruptions, and a seven-year oversight commitment to address issues that result from the acquisition.

CP Rail’s purchase of Kansas City Southern comes at a time of heightened scrutiny of the U.S. rail industry in the wake of several derailments, notably a recent toxic chemical spill in Ohio.

The purchase of Kansas City Southern will grow Canadian Pacific’s network by 50% to 20,000 miles of track that stretches from Canada to Mexico.

But even after the deal is finalized later this year, Canadian Pacific Railway will remain the smallest of the major railroads that operate in the U.S. and Canada. The industry, which used to have more than 30 large railroads, now only has six in North America.

CP Rail’s stock is up 5% over the last 12 months and trading at $106.10 per share.