CP Rail, Kansas City Southern Rail to combine next month after U.S. approval
Canadian Pacific Railway Ltd. has introduced it’ll formally mix with Kansas City Southern Railway Co. on April 14, beneath the brand new banner of Canadian Pacific Kansas City.
The U.S. rail regulator accepted the US$31-billion this week, clearing the ultimate hurdle in CP’s bid to purchase KCS and create the one railway stretching from Canada by way of to the U.S. and Mexico.
“Our new combined railroad will create a truly unique single-line network connecting three nations and instantly injecting new competition into the North American rail industry when our supply chains have never needed it more,” stated CP chief govt Keith Creel, who will helm the newly merged firm, in a news launch Friday.
April 14 was the earliest doable date to finish the merger, based mostly on the U.S. Surface Transportation Board’s determination Wednesday.
CP’s Nadeem Velani will proceed as chief monetary officer on the joined firm, which is able to headquarter in Calgary and endure full integration over the subsequent three years.
To “ensure continuity,” KCS chief govt Pat Ottensmeyer will advise Creel by way of the rest of 2023, CP stated.
Surface Transportation Board chair Martin Oberman stated Wednesday the acquisition is in step with the general public curiosity. He stated that whereas consolidation within the rail trade has been a priority over the previous few a long time, KCS is the smallest of the United States’ six Class I railways, and the mixed firm will stay so – making the danger that the deal will cut back competitors much less of a priority.
There are few overlapping routes between the 2 railways, Oberman famous. The merger is predicted to hurry up freight journey time, improve effectivity and encourage higher competitors with the opposite 5, bigger U.S. railways, he stated.
It can be anticipated to shift about 64,000 truckloads yearly from North America’s roads to rail.
However, the regulator did connect circumstances to the deal, together with that the railway hold gateways – connection factors between the CPKC system and different railways – open on “commercially reasonable terms,” and to justify in writing any charge will increase over a sure stage on interline actions.
“We acknowledge the thorough and thoughtful consideration put into the STB’s final decision, including the conditions it imposes in order to assure that the transaction’s public benefits are realized and any potential harms are avoided,” Creel stated on within the Friday assertion.
“We intend to participate co-operatively and proactively to assist the STB during its oversight process and will honour the conditions the STB has imposed.”
CP competitor Canadian National Railway Co. had fought an extended battle over the acquisition earlier than CP closed the deal in December 2021. CN had wooed KCS away from an preliminary CP supply with a US$33.6-billion proposal in May 2021 earlier than the U.S. regulator rejected CN’s bid in August of that 12 months.
The new Canadian Pacific Kansas City will function practically 33,000 kilometres of rail and make use of practically 20,000 individuals.
The community will stretch from Vancouver and St. John, N.B., to Houston and Mexico City, reaching the Gulf of Mexico and the Pacific Ocean.
This report by The Canadian Press was first revealed March 17, 2023.
