CP Rail, KCS to merge under new name next month
Canadian Pacific Railway Ltd. has announced it will officially combine with Kansas City Southern Railway Co. on April 14, under the new banner of Canadian Pacific Kansas City.
The U.S. rail regulator approved the $31-billion (U.S.) deal this week, clearing the final hurdle in CP’s bid to buy KCS and create the only railway stretching from Canada through to the U.S. and Mexico.
“Our new combined railroad will create a truly unique single-line network connecting three nations and instantly injecting new competition into the North American rail industry when our supply chains have never needed it more,” CP chief executive Keith Creel, who will helm the newly merged company, said in a news release Friday.
April 14 was the earliest possible date to complete the merger, based on the U.S. Surface Transportation Board’s decision Wednesday.
CP’s Nadeem Velani will continue as chief financial officer at the joined company, which will headquarter in Calgary and undergo full integration over three years.
To “ensure continuity,” KCS chief executive Pat Ottens meyer will advise Creel through the remainder of 2023, CP said.
Surface Transportation Board chair Martin Oberman said Wednesday the acquisition is in line with the public interest. He said that while consolidation in the rail industry has been a concern over the last few decades, KCS is the smallest of the United States’ six Class I railways, and the combined company will remain so — making the risk that the deal will reduce competition less of a concern.
There are few overlapping routes between the two railways, Oberman noted. The merger is expected to speed up freight travel time, enhance efficiency and encourage better competition with the other five, larger U.S. railways, he said. It is also expected to shift about 64,000 truckloads annually from roads to rail.
However, the regulator did attach conditions to the deal, including that the railway keep gateways — connection points between the CPKC system and other railways — open on “commercially reasonable terms.”
The new Canadian Pacific Kansas City will operate nearly 33,000 kilometres of rail and employ nearly 20,000 people. The network will stretch from Vancouver and St. John, N.B., to Houston and Mexico City, reaching the Gulf of Mexico and the Pacific Ocean.