CP-KCS deal wins OK from foreign investment committee in U.S.

Canadian Pacific Railway Ltd. is now one step closer to receiving regulatory approval for the acquisition of Kansas City Southern.

Calgary’s railway said Tuesday, the U.S. Committee on Foreign Investment approved the purchase of KCS.

However, the deal – which would create the only single-line railroad linking the United States, Mexico and Canada – still requires approval by the U.S. The transaction is currently being reviewed by the Surface Transportation Board.

CP said It expects to hear a decision from STB in the early part of next year.

Canadian National Railway Co. abandoned its rival takeover bid of KCS last year after the Surface Transportation Board denied its request for a trust.

KCS was purchased by CP at a price of US$31billion, which included US$3.8billion of debt assumption.

CP’s deal ended in December. However, KCS shares were transferred to a voting trust. This gives the U.S. Railway the freedom to operate on its own while the STB reviews.

Mexican regulators have already approved the deal.

CP has said KCS’s acquisition will allow KCS to grow significantly and enable 60,000 truckloads per year to be moved off the public highways.

CP anticipates that the deal will generate $1 billion annually in synergies after the transaction is completed.

This report was published by The Canadian Press on Aug. 16, 2022.