$31 billion CPKC deal takes next step as STB review hangs in balance


Canadian Pacific Railway Limited (CP) has announced it has received the required regulatory clearance from the Committee on Foreign Investment in the United States (CFIUS) for the merger of CP and Kansas City Southern (KCS). 

CP completed its acquisition of KCS in December last year.

However, industry body U.S. Surface Transportation Board (STB) is completing its regulatory review of whether to green-light the $31 billion merger.

Next month the STB will hold a three-day public hearing on the proposed deal.

The companies’ joint railroad control application will create Canadian Pacific Kansas City (CPKC), the only single-line railroad linking the United States, Mexico and Canada.

Mexican regulators gave the go-ahead for the landmark merger in November last year.

The combined company would have a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people, and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

The CP-KCS merger would provide access to Atlantic, Gulf, and Pacific ports, linking international intermodal shippers with North America’s largest consumer markets providing new optionality, capacity, and resiliency.

Earlier this year, in a letter to the STB, commissioners Carl Bentzel, Louis Sola, and Max Vekich from the Federal Maritime Commission (FMC) argued that the merger would unfairly benefit Canadian ports for US cargo.

The STB review of CP’s proposed control of KCS is expected to be completed in early 2023.

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