On March 21, two of North America’s largest railroad firms reported a merger that would connect freight customers to Canada, America, and Mexico on a single network for the first time in history.
Remarkably, Canadian Pacific agreed to buy Kansas City Southern in an agreement worth around $25 billion. Notably, it would combine two of the industry’s fastest-growing rail firms.
According to companies, the deal would help them become more competitive. That could become increasingly significant as the USMCA, the revised NAFTA trade deal between America, Canada, and Mexico, takes hold.
Furthermore, based on the recent release, the new firm would operate 20,000 miles of rail. They would employ almost 20,000 people and make annual sales of nearly $8.7 billion.
According to Canadian Pacific CEO Keith Creel, the new competition they will inject into the North American transportation market cannot occur soon. They added that the new USMCA Trade Agreement between these countries makes the effective integration of the continent’s supply chains more crucial than ever before.
The companies predict this could occur in the following year
If the deal is fulfilled, the rail firms will join their networks in Kansas City, Missouri, giving consumers access to Canada, the U.S. Midwest, the U.S. Northeast, the South Central United States, and Mexico.
The firm would be called Canadian Pacific Kansas City. However, despite the hefty purchase value, it wouldn’t climb the rankings of the greatest of the top-tier railroads. It would remain No. 6 in America by revenue.
Though another essential thing to mention is that the companies are forecasting a potential antitrust fight. In order to win permission, they noted in their joint statement that the deal wouldn’t remove any independent railroad competition from the market since the two combining firms serve different geographies.
Additionally, the United States Surface Transportation Board regulator would need to accept the agreement first. The companies predict that could occur in the following year.