Willkie Advises on $29 Billion Deal Forming First US-Mexico-Canada Rail Network

March 22, 2021

Willkie represented BofA Securities and Morgan Stanley & Co. LLC, who are serving as financial advisors to Kansas City Southern, in connection with KCS’s combination with Canadian Pacific Railway Limited.

On March 21, Canadian Pacific Railway Limited (TSX: CP, NYSE: CP) (“CP”) and Kansas City Southern (NYSE: KSU) (“KCS”) announced they have entered into a merger agreement, under which CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $29 billion, which includes the assumption of $3.8 billion of outstanding KCS debt. Willkie represented BofA Securities and Morgan Stanley & Co. LLC, who are serving as financial advisors to Kansas City Southern, in the transaction.

The transaction values KCS at $275 per share. Following the closing into a voting trust, common shareholders of KCS will receive 0.489 of a CP share and $90 in cash for each KCS common share held.

Following final approval from the Surface Transportation Board, the transaction will combine the two railroads to create the first rail network connecting the U.S., Mexico and Canada. Joining seamlessly in Kansas City, Mo., 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 network’s new single-line offerings will deliver dramatically expanded market reach for customers served by CP and KCS, provide new competitive transportation service options, and support North American economic growth. The transaction is also expected to create jobs across the combined network. Additionally, efficiency and service improvements are expected to achieve meaningful environmental benefits.

While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will be a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people and generating total revenues of approximately $8.7 billion based on 2020 actual revenues.

The Willkie team was led by partners Steven Seidman and Laura Delanoy, and included associates Daniel Alster and Ian Morganelli and law clerk Joshua Mathew.