Mexico City. The Canadian Pacific Railway will merge with American Kansas City South (KCS) and form the first railway to form the Canada, United States and Mexico, North American Trade Agreement (T-MEC).
The Canadian company struck a $ 27.2 billion cash and stock deal to buy Kansas City South after Canadian National Railways agreed it could not save its own $ 29.6 billion deal on U.S. railroads.
The connection will create a direct rail link connecting Canada, the United States and Mexico, with a network of 32,000 kilometers and an annual revenue of about 8.7 billion.
The Canadian Pacific $ 300-share cash and stock deal is higher than the $ 275-share cash and stock deal proposed in March to buy Kansas City South.
The deal was canceled when the Canadian National negotiated with Kansas City South in May for $ 325 in cash and a share offer.
The Canadian National won last month when the U.S. Surface Transportation Board (STB) rejected a temporary “voting trust” structure that would allow Kansas City South shareholders to review the agreement without waiting for full regulatory approval.
The Canadian Pacific has received approval from the STB for its proposed voting trust, so Kansas City South shareholders will receive $ 300 in cash and shares, even if the regulator rejects the deal.
The regulatory commitment it provided led the Kansas City South board of directors to switch to a contract with the Canadian Pacific.
The Canadian National Hedge Fund has been pushing to drop its attempt to buy Kansas City South from its investors, including DCI Management.
Shares of Canadian National rose 3.7 percent on Wednesday – the day the deal was announced – to $ 150.97 on the Toronto Stock Exchange as its investors offered relief in abandoning the deal. This Thursday, the bond was down 0.64 percent at $ 146.85 and the New York Stock Exchange was down 1.31 percent at $ 115.76, but in the after-trade activity, they resumed the uptrend with a gain of 0.03. $ 115.80 per share.
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