Sep 12, 2021 - Economy

Train mega-merger takes a big new turn

Dan Primack

Illustration of a train with freight cars made of hundred dollar bills. — Illustration: Aïda Amer/Axios

Kansas City Southern on Sunday said it has agreed to be acquired by Canadian Pacific Railway, in a deal that would create the only railway to run from Canada to Mexico.

Behind the scenes: This is the second time that KCS has agreed to be acquired by Canadian Pacific. It first accepted a takeover offer in March, but then walked away in May after a higher bid was submitted by rival railroad operator Canadian National Railroad.

But Canadian National ran into regulatory troubles, causing Kansas City to reopen talks with Canadian Pacific (which had upped its offer in early August, and which doesn't face the same regulatory issues).

Details: Canadian Pacific plans to pay $31.1 billion in cash and stock, including $3.8 billion of assumed debt. That's more than Canadian Pacific's original bid, but less than what Canadian National was prepared to pay.

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Train mega-merger takes a big new turn

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