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Illustration: Aïda Amer/Axios

The freight train trip from Canada to Mexico still goes through Kansas City, but the rest of the route remains unsettled.

Driving the news: Kansas City Southern (NYSE: KCS) on Friday canceled its planned $29 billion merger with Canadian Pacific Railway (NYSE: CP), instead opting for a $33.6 billion deal with Canadian National Railway (NYSE: CNI).

Why it matters: Either deal would create the only railroad that runs from Canada to Mexico, and comes against the backdrop of increased transcontinental shipping due to post-pandemic reopening and the USMCA trade deal.

Details: Canadian National offered $325 per share, versus $275 per share from Canadian Pacific. Kansas City Southern shareholders retain 12.6% of the combined company, whereas they would have retained 25% under terms of the original agreement.

  • Both offers include the assumption of around $3.8 billion in debt.
  • Kansas City Southern has already paid a $700 million termination fee to Canadian Pacific, which is expected to be reimbursed by Canadian National, per an SEC filing.

Not so fast: Canadian Pacific opted against raising its bid, but not because it's given up. Instead, the spurned suitor is biding its time, believing that the new deal will be blocked by U.S. regulators.

  • Its optimism is rooted in a decision last week by the U.S. Surface Transportation Board (STB) to deny Canadian National's request to form a voting trust that would buy and operate Kansas City Southern while the deal is under regulatory review.
  • Canadian Pacific had been successful in its own voting trust motion, and believes the STB reticence on the current deal is because of some route overlap and competition issues that aren't present in the original merger. That said, STB is taking a second look at Canadian National's offer, now that Kansas City Southern has actually accepted it.

The bottom line: If STB does stop the Canadian National train, Canadian Pacific remains positioned to pick up the route.

Go deeper

Updated 1 min ago - Science

NTSB probes crash that killed 10 in Alabama as storm hits Southeast, Midwest

Flash-flooding in Bloomington, Indiana, on Saturday. Photo: Jeremy Hogan/SOPA Images/LightRocket via Getty Images

The National Transportation Safety Board announced Sunday that it's sent a team to Alabama to help investigate a fiery multi-vehicle weekend crash that killed 10 people, including nine children.

The big picture: Saturday's crash, south of Montgomery, occurred amid a tropical depression that left 13 people dead in Alabama as it triggered flash floods and spawned tornadoes that razed "dozens of homes" in the Southeast over the weekend, per AP. Parts of the Midwest, including Indiana and Chicago, where a tornado struck late Sunday.

Laurel Hubbard to become 1st openly trans athlete to compete at Olympics

New Zealand's Laurel Hubbard at the Gold Coast 2018 Commonwealth Games in Australia, when she became the first openly transgender athlete to represent NZ. Photo: Scott Barbour/Getty Images

The New Zealand Olympic Committee has announced that Laurel Hubbard has been selected for the women's weightlifting team for the Tokyo Games — making her the first openly transgender athlete to compete at the event.

The big picture: Hubbard, 43, is part of a five-member Kiwi weightlifting team and will compete in the women's super heavyweight category. Meanwhile, BMX rider Chelsea Wolfe will become the first openly trans athlete to travel to the Olympics with Team USA, when she arrives in Tokyo as a reserve rider.

American Airlines cuts hundreds of flights amid demand surge

Photo: Joe Raedle/Getty Images

American Airlines announced Sunday that it's cutting some 950 flights from its schedule, including 296 this weekend, to reduce potential pressure on its operations, the Wall Street Journal first reported.

Driving the news: The U.S. vaccine rollout has led to a massive increase in travel bookings. The airline noted in an emailed statement that it's facing an "incredibly quick ramp up of customer demand."