Sheldon, Iowa — The railroad line going east out of Sheldon is about to become part of a Canada/USA/Mexico freight line.
The railroad line used to go through — not only to — Sheldon, when it was known as the Milwaukee Road. After the Milwaukee went out of business, it was the Soo Line for a while, before being acquired by I & M Rail Link, and eventually by Dakota, Minnesota, and Eastern subsidiary, Iowa, Chicago, and Eastern. In 2008, the Iowa, Chicago & Eastern and its parent company, DM&E, were merged into the Canadian Pacific. The trains normally found on the track these days carry the Canadian Pacific logo.
This past week, Canadian Pacific Railway Limited and Kansas City Southern 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. The transaction has the unanimous support of both boards of directors.
Following final approval from the Surface Transportation Board (“STB”), 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, 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’s system throughout Mexico and the South Central U.S.
Canadian Pacific officials say their 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, they claim that efficiency and service improvements are expected to achieve meaningful environmental benefits.
Following STB approval of the transaction, CP will acquire control of KCS. The combined entity will be named Canadian Pacific Kansas City (“CPKC”). Calgary will be the global headquarters of CPKC, and Kansas City will be designated as the U.S. headquarters. The Mexico headquarters will remain in Mexico City and Monterrey. CP’s current U.S. headquarters in Minneapolis-St. Paul will remain an important base of operations.
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