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A merger between rail giants Canadian Pacific and Kansas City Southern has been approved by regulators at the Surface Transportation Board. Esther Fung reports:
A federal regulator has approved withconditions a merger between Canadian Pacific Railway Ltd. CP 6.23%increase; green up pointing triangle and Kansas City Southern, a $28 billion deal that would create the first freight rail network linking Canada, the U.S. and Mexico.
“The merger is expected to offer more efficient and reliable service…and to improve the overall quality and availability of rail transportation services to the public,” said a Wednesday decision from the Surface Transportation Board, the economic regulator primarily overseeing freight railroads.
The transaction to create Canadian Pacific Kansas City, or CPKC, is the industry’s biggest in two decades. The approval also comes as the industry’s operations are under scrutiny as a result of recent derailments and mounting safety concerns at major freight railroads.
Representatives from Canadian Pacific and Kansas City Southern couldn’t immediately be reached for comment. The railroads were the sixth- and seventh-largest freight haulers, respectively, according to STB data for last year. Even after the combination, it will still be the smallest of the so-called Class 1 railroads.
The merger will also enhance competition by creating a stronger competitor for Union Pacific Corp., BNSF Railway and Canadian National Railway, the STB said.
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