People with direct knowledge of the matter said the railroad group Canadian Pacific had agreed to buy Kansas City Southern for $ 28.9 billion, including debt in the largest takeover deal.
The people of Calgary will pay $ 275 per share in cash and stock to buy the American cargo group. The deal is expected to be announced Sunday.
CP’s proposal represents a 23 percent premium to the $ 224 closing price of Kansas City Southern at the end of last week. The transaction valued its equity at $ 24.9 billion before including debt.
The board of Kansas City Southern’s board approved the offer Saturday and the two companies notified the Surface Transportation Board, the U.S. regulator for freight rail, of the deal, the people added. The acquisition will have to be approved by the STB.
Kansas City Southern’s network extends from the American Middle East to ports on the east and west coasts of Mexico.
The railway sector was hit hard in the early stages of the pandemic due to the restrictions imposed by the US government to restrict the spread of the coronavirus.
But the outlook for the industry has improved significantly over the past few months as the US accelerates its vaccine deployment and significantly increases its operating activities. Biden’s steps to strengthen trade relations between the United States and Mexico are expected to further boost rail activity.
Shares in Kansas City Southern have more than doubled in the past year.
Last September, the US railroad group led a takeover bid from a consortium led by Blackstone and Global Infrastructure Partners, which valued its shares at $ 21 billion.
CP declined to comment. Kansas City Southern did not respond to a request for comment.
This article has been amended to reflect the fact that the Surface Transportation Board did not approve the agreement