Railroads Look to be Super Highway

 

Merger on the Orient Express

 

Yesterday, railroad operator Canadian Pacific announced plans to acquire Kansas City Southern for ~$25 billion.   This is a big deal, not just because it’s a deal that is big (the biggest M&A announced so far this year), but also because if regulators green-light it, the new company will have the first US-Mexico-Canada railroad.  Kansas City Southern’s routes run through Mexico and Texas to...Kansas City.  Canadian Pacific, which has a network that runs across Canada and some Northern US states, has been eyeing its railroad rival for years as a way to extend its own southern reach.  The deal may have some trouble with that regulatory green light; Canadian railroads have historically hit antitrust speed bumps in efforts to buy US companies.  Zoom out: The deal is a bet that North American trade will come roaring back as economies and factories flicker back to life. The USMCA trade agreement took effect last July and is expected to boost trade among the three countries.