May 21, 2021 - Economy & Business

Kansas City Southern to merge with Canadian National Railway in $34 billion deal

A Canadian Pacific Railway locomotive in Alberta, Canada, in March 2021.

A Canadian Pacific Railway locomotive in Alberta, Canada, in March 2021.

Kansas City Southern canceled its planned $25 billion merger with Canadian Pacific Railway, announcing Friday it will instead be combining with Canadian National Railway in a $33.6 billion buyout bid.

Why it matters: "The combination would create the first freight-rail network linking the U.S., Mexico and Canada by connecting ports in the three countries," the Wall Street Journal writes.

Details: For canceling its merger agreement with Canadian Pacific, Kansas City Southern will pay a $700 million breakup fee, which will be reimbursed by Canadian National, according to MarketWatch.

  • Under the merger agreement, Kansas City Southern's shareholders will receive $200 in cash and 1.129 Canadian National shares for each Kansas City Southern share they own.
  • Shares of Kansas City Southern KSU rose 0.6% on Friday after news of the merger broke, according to MarketWatch.
Go deeper