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U.S. board to announce decision on Kansas City Southern acquisition deal

2023-03-14T17:58:10Z

The Surface Transportation Board said it plans to announce on Wednesday whether it will approve or reject Canadian Pacific’s (CP.TO) $31 billion deal to acquire U.S. railroad Kansas City Southern.

The acquisition, which combines the sixth- and seventh-largest U.S. railroads by revenue, was agreed to in 2021. The deal has since closed but Kansas City shares were transferred to a trust and the railroad must operate independently until the board makes a decision.

The chair of the board that oversees U.S. freight railroads will hold a press conference on Wednesday to discuss the decision. Canadian Pacific declined to comment while Kansas City did not immediately respond to a request for comment.

Earlier this month, U.S. Senator Elizabeth Warren urged the board to reject the deal, saying it would hurt competition, prompt job losses and disrupt service.

Warren, a Democrat, said in a March 2 letter the deal would “reduce competition in an already highly consolidated market and could cause increased shipping costs” and “could result in significant job losses and service disruptions that negatively impact American supply chains.”

The deal would combine the railroads into a single system known as Canadian Pacific Kansas City that has 20,350 miles (32,750 km) of track extending from Canada to Mexico, including about 8,600 miles in the United States.

“This merger would give the new company additional leverage over competitors, and has shippers worried that they’ll be left with no alternative rail shipping options,” Warren wrote.

The number of big U.S. railroads has already shrunk to just seven from 33 in 1980, Warren noted.

Warren cited the Feb. 3 derailment of a Norfolk Southern-operated (NSC.N) train in East Palestine, Ohio, saying it raised questions about railroad safety and the impact of deregulation and cost-cutting in the industry.

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