'Ready to roll': CP Rail preparing for KCS merger, ruling expected within weeks

Keith Creel, head of the Calgary-headquartered railway, made the comment during a conference call with analysts earlier this week, in which he confirmed a ruling by the U.S. Surface Transportation Board is expected sometime this quarter.Sign up to receive daily headline news from the Calgary Herald, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.

While CPKC will remain the smallest of six large railways operating in the U.S. by revenue, it will operate nearly 33,000 kilometres of rail — extending from Canada, into the U.S. and all the way to Mexico — and employ nearly 20,000 people. It’s been a long and bumpy route to get to this point. Both CP and its competitor, Montreal-based Canadian National Railway Co., were interested in acquiring KCS, and fought a testy battle behind the scenes for months before CP and the U.S. railway announced a friendly offer in March of 2021.Article content

CP, which already had permission to use a voting trust under older rules, was able to close its proposed deal in December of 2021. Since then, the shares of KCS have been in a voting trust that allows the U.S. railway to operate independently while the U.S. Surface Transportation Board completes its review.

The anti-trust division of the U.S. Department of Justice has also expressed concerns over the proposed merger, warning in a recent letter to the STB that the deal poses a threat to competition and that the regulator must “scrutinize any transaction that could weaken our freight system.” On Tuesday’s conference call, CP’s chief marketing officer John Brooks said the railway and KCS have already been conducting test runs in advance of the STB’s decision, running trains from the U.S. Midwest to Mexico on an inter-line basis.

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