Canadian Pacific agreed to buy Kansas City Southern for $ 25 billion, in what would be the biggest deal of the year, according to people familiar with the matter.
The Calgary-based railway company offered to buy the US freight group for $ 275 per share in cash and shares.
CP’s proposal represents a 23 percent premium over the closing price of Kansas City Southern’s shares on Friday.
The Kansas City Southern board approved the offer. The two companies informally informed the Surface Transportation Board, the U.S. regulator, of the deal on Saturday night, informed people said. The acquisition will need to be approved by the STB.
The transaction is expected to be announced on Sunday, people familiar with the matter said.
The deal comes at a time when U.S.-Mexico trade is expected to increase after Joe Biden’s victory in the U.S. presidential election in 2020 against Donald Trump.
Kansas City Southern’s network extends from the midwest of the United States to ports on the east and west coasts of Mexico.
CP declined to comment.
Kansas City Southern did not respond to a request for comment.
The American company made a takeover bid for Global Infrastructure Partners and Blackstone Group last year that valued the US rail group at $ 21 billion.
Kansas City Southern’s stock has more than doubled in the past 12 months.
The rail sector was hit hard in the early stages of the pandemic because of restrictions imposed by the United States government to curb the spread of the coronavirus.
But in the past few months, the outlook for the sector has improved markedly, as the United States has accelerated the launch of vaccines and commercial activity has increased considerably.
Biden’s moves to strengthen US-Mexico trade relations are expected to further boost rail activity.
This article was amended to reflect the fact that the Surface Transport Council did not approve the deal