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The deal comprises $25 billion in stock and cash and $3.8 billion of debt on KCS’s books. Following the deal, CPR expects its outstanding debt to be approximately $20.2 billion.
The transaction values KCS at $275 per share, representing a near 23% premium to Friday’s close price of $224.16.
Canadian Pacific’s shares traded 3.3% lower.
Joining in Kansas City in America’s heartland, CP and KCS together will connect customers via single-network transportation offerings between points on CP’s system throughout Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’ system throughout Mexico and the South Central U.S.
The combined company is expected to create annualized cost savings of approximately $780 million over three years.