Canadian Pacific Railways Ltd. ‘s Keith Creel entered into a deal to buy Kansas City Southern for a record $25 billion, according to press release. The deal creates the first 20,000-mile railroad to traverse Canada, the U.S, and Mexico.
Creel followed the footsteps of his mentor, Hunter Harrison, whose revolutionary efficiency strategy became the standard of major North American railroads.
The deal is a good shot for Creel who couldn’t strike a successful turnaround effort at CSX Corp. before he died in late 2017, aged 73.
If Creel completes the deal next year, it could be the last chapter in the rail merge saga that started off by deregulation in the 1980s and was credited for saving a dying industry.
The timing of the deal follows a global pandemic that made companies rethink the risks involved in overseas supply chains.
Under the deal, Kansas City Southern investors will receive 0.489 of a CP share and $90 in cash for each share they hold, valuing the stock at $275 apiece.
Creel will serve as the CEO of the new company and plans to stay at the helm until at least early 2026.
The boards of the two companies expect to get final approval of the deal from regulators by mid-2022.
The deal is the biggest Canadian purchase of a U.S asset since 2016.
Kansas City Southern stock is currently gaining. KSU: NYSE is up 15.54% on premarket, CP: TSE closed at CAD $474.27 on Friday.
