Canadian Pacific clinches $27 bln Kansas City railway deal

A $27 billion merger to create the first direct railway linking Canada, the United States and Mexico is back on track.

Canadian Pacific Railway is moving ahead Wednesday with its offer to buy Kansas City Southern after a rival bid from Canadian National Railway fell through, putting an end to a high-stakes bidding war.

The link-up between the two railroad companies would create a network that spans three countries, 20,000 miles, and brings in about $8.7 billion in annual revenues.

This merger comes at a time when trade between the Americas is expected to pick up after last-year's ratification of the US-Mexico-Canada Agreement that removed the threat of trade tensions that escalated during the Trump years.

The combined railroad operator also stands to benefit once supply disruptions caused by the health crisis ease and products start flowing more readily across the rails.

But the deal is not in the all clear just yet.

Canadian Pacific shareholders still have to sign off on the deal.

And the combination also needs the approval of the U.S. Surface Transportation Board.

But in a sign investors don't think this deal will be derailed - shares of both railroad operators were up in late-Wednesday trading.

The STB did not immediately respond to a request for comment.

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