The U.S. Surface Transportation Board (STB) has approved Canadian Pacific Railway Ltd.’s (TSX:CP) US$31 billion acquisition of Kansas City Southern (NYSE:KSU) in a deal that will give CP rail lines connecting Canada, the United States and Mexico.
Requirements in the STB’s March 15 decision include an unprecedented seven-year oversight period and numerous conditions aimed at preserving railway competition, mitigating environmental impacts and promoting efficient passenger rail service.
In the announcement of its decision, the board concluded that the merger would result in improvements in safety and carbon emissions reductions.
Merging the two railway companies will form Canadian Pacific Kansas City (CPKC) and create North America’s first single-line railway connecting Canada, the United States and Mexico.
CP began its pursuit of the U.S. Class 1 railway company back in 2021 with a US$25 billion acquisition proposal. The two railways filed their merger application with the STB on Oct. 29, 2021.
CP announced on March 17 that it will finalize the combination of the two railways on April 14 to create CPKC.
In a press release, CP President and CEO Keith Creel said the decision “clearly recognizes the many benefits of this historic combination. As the STB found, it will stimulate new competition, create jobs, lead to new investment in our rail network and drive economic growth.”
Creel will become CPKC's president and CEO following the April 14 merger of the two railway companies.
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