The Kansas City Southern and Canadian Pacific railways have agreed to a merger that will create the first railroad network spanning from Canada, through the United States, to Mexico.

Canadian Pacific will acquire Kansas City Southern in a cash and stock transaction valued at 29 billion dollars. The board of directors of both railroads unanimously support the merger.

After approval of the Surface Transportation Board the two railroads will combine to form the first rail network connecting the United States, Canada and Mexico joining seamlessly in Kansas City. The two combined railroads will take advantage of Canadian Pacific's strength in Canada, the Midwest, the North East and Kansas City Southern's network throughout Mexico and the South Central United States.

“This transaction will be transformative for North America, providing significant positive impacts for our respective employees, customers, communities, and shareholders,” said CP President and Chief Executive Officer Keith Creel in a media release from both railroads.

“KCS has long prided itself in being the most customer-friendly transportation provider in North America,” said KCS President and Chief Executive Officer Patrick J. Ottensmeyer in the same release. “In combining with CP, customers will have access to new, single-line transportation services that will provide them with the best value for their transportation dollar and a strong competitive alternative to the larger Class 1s. Our companies’ cultures are aligned and rooted in the highest safety, service and performance standards.”

There's two steps to complete the merger. The first is the business aspect of the transaction dealing with the stakeholders of both companies and making sure the transaction of Canadian Pacific acquiring Kansas City Southern is approved. The second part of the process is both railroads receiving regulatory approval from the Surface Transportation Board and other regulatory authorities. The entire process is expected to take until the middle of next year.

“Importantly, KCS employees will benefit from being part of a truly North American continental enterprise, which creates a strong platform for revenue growth, capital investment, and future job creation. Customers, labor partners, and shareholders will all benefit from the inherent strengths of this combination, including attractive synergies and complementary routes,” said Mr. Ottensmeyer.

If the merger is completed the combined railroad will be named Canadian Pacific Kansas City. The railroad's global headquarters will be in Calgary, while the United States headquarters will be in Kansas City. The Mexico headquarters of the combined network will remain in Mexico City and Monterey. The railroad says Canadian Pacific's current U.S. Headquarters will remain an important base of operations.

Both railroads have created a website where you can learn more about the merger.

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