Canadian-U.S. railroad merger takes off

Written by By Emily Song, CNN Mexican regulators have approved the merger of Canadian Pacific and Kansas City Southern, following a long saga that has caused turmoil on the stock markets of both companies….

Canadian-U.S. railroad merger takes off


Written by By Emily Song, CNN

Mexican regulators have approved the merger of Canadian Pacific and Kansas City Southern, following a long saga that has caused turmoil on the stock markets of both companies.

The merger, which had stalled after regulators in Mexico and the United States delayed its approval, is now complete.

“We’re very pleased that the Mexican government has approved this transformative, landmark transaction, which will bring to the railroad industry one of the most advanced digital operating platforms in the world,” said CP CEO Hunter Harrison in a statement.

“This is a major milestone for our company as we move our common plan forward towards completion,” said Kellie Whitman, CEO of Kansas City Southern.

Besides sharp growth in revenue, analysts expect the combination will also save $100 million per year. Canada is by far the larger of the two companies by revenue, and the merger is expected to increase that.

The Minnesota-based company currently reports about $14 billion in annual revenue. CP reported about $11 billion in 2016. Analysts expect it could end up being the largest U.S. railroad.

The deal has faced a myriad of regulatory issues. Canada’s competition bureau stepped in in February to block the deal, citing concerns that it would reduce competition in three western Canadian coal mining areas and added pressure on low commodity prices. Canada’s antitrust regulator has already approved the deal.

In April, Kansas City Southern issued a press release arguing that the decision “changes the landscape” for the industry, specifically when it comes to diversifying revenue streams.

In the United States, the Oklahoma-based company reported nearly $1.6 billion in revenue in 2016. The Canadian-based company reported $5.8 billion.

The two companies said the merger will lead to long-term job growth in the area.

Leave a Comment