BY Fraser Tennant
Giving the green light to the first major railroad merger in 20 years, the US Surface Transportation Board (STB) has approved the $31bn merger of Canadian Pacific (CP) and Kansas City Southern (KCS).
The STB’s decision is effective as of 14 April 2023, at or after which point the two railways combine to create the new CPKC – the first single-line railway connecting the US, Mexico and Canada.
Among the core conclusions reached by the STB regarding the public and pro-competitive benefits of the CP-KCS combination are that the combination should ultimately enhance safety and benefit the environment.
The regulator also stated that the transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class I carriers by providing improved service at lower cost.
“The STB’s decision clearly recognises the many benefits of this historic combination,” said Keith Creel, president and chief executive of CP. “As the regulator found, it will stimulate new competition, create jobs, lead to new investment in our rail network and drive economic growth.
“These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more,” he continued. “A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP’s industry-leading safety practices.”
Headquartered in Calgary, Canada, CPKC will operate approximately 20,000 miles of rail, employing close to 20,000 people. Once combined, full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination.
“This important milestone is the catalyst for realising the benefits of a North American railroad for all of our stakeholders,” said Patrick J. Ottensmeyer, president and chief executive of KCS. “The KCS board of directors and management team are very proud of the many contributions and achievements of the people who have made KCS what it is today.”
Mr Ottensmeyer concluded: “We are excited for the boundless possibilities as we move forward into the next chapter as CPKC.”
News: US regulator approves Canadian Pacific purchase of Kansas City Southern