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Canadian Pacific Railway Ltd. has offered to buy Kansas City Southern for US$25 billion, marking the largest deal so far this year, Financial Times reported, citing people with knowledge of the matter who weren’t identified.
The Calgary-based company has offered $275 a share in a cash and stock deal, the newspaper said. The amount is a 23 per cent premium to Friday’s close of $224.16, when the price reached a record. The transaction is expected to be announced Sunday, FT said.
The proposal has been approved by the board of Kansas City Southern, as well as the U.S. Surface Transportation Board, FT reported. The two companies couldn’t be reached for comment, it added.
The deal was done as trade between the U.S. and Mexico is expected to pick up under the Biden administration, the newspaper said. The transaction will give Canadian Pacific access to Kansas City Southern’s sprawling Midwest U.S. rail network, which connects farms in Iowa to ports in the Gulf of Mexico.
In September, Dow Jones reported Kansas City Southern rejected a $20-billion offer from Blackstone Group Inc. and Global Infrastructure Partners.
Shares of the Kansas City, Mo.-based company have jumped 9.8 per cent this year, more than twice the gain of the S&P 500 Index. Canadian Pacific, which rose to a record Thursday, climbed 7.4 per cent for the year.
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