KANSAS CITY, Mo. (AP) — Mexican regulators have approved Canadian Pacific's $31 billion plan to acquire Kansas City Southern and create a railroad linking Mexico, Canada and the United States.
The deal could close as soon as mid-December if shareholders of both companies approve it. Then Kansas City Southern would be held by a voting trust while the U.S. Surface Transportation Board conducts its lengthy review of the transaction but its shareholders would be paid right away.
The $31 billion deal includes 2.884 CP shares and $90 in cash for each shareholder and Canadian Pacific would assume roughly $3.8 billion of Kansas City Southern's debt.
The railroads said Friday that the STB's review of the deal is expected to continue into the fourth quarter of next year.
U.S. regulators haven't approved any major railroad mergers since the 1990s, so it's not clear yet whether this deal will ultimately be approved. But executives at Canadian Pacific and Kansas City Southern have said they expect the deal will be completed.
“This historic combination will add capacity to the U.S. rail network, create new competitive transportation options, support North American economic growth, and deliver important benefits to customers, employees and the environment,” CP CEO Keith Creel said.
Earlier this year, Canadian Pacific beat out Canadian National’s $33.6 billion bid to acquire Kansas City Southern, even though that railroad offered more money, because the STB refused to approve part of CN’s plan to acquire the Missouri-based railroad.