Mexican regulators approve Canadian-Pacific railroad merger deal worth Rs 2.32 lakh crore

Mexican regulators on Monday approved a railroad merger deal worth $31 billion (approximately Rs 2.32 lakh crore) that could create a link between Mexico, Canada and the United States. The Mexican Federal Economic Competition Commission (COFECE) and Mexican Telecom Institute (IFT) granted a go-ahead to acquire Kansas City Southern (KCS) as a part of the Canadian Pacific (CP) railroad merger. The deal now awaits the fulfilment of customary closing conditions, such as stockholders' nod, who are expected to vote on the proposed deal next month, Railway technology reported.

The developments come after KCS and CP submitted a railroad control application with the Surface Transportation Board (STB), which was accepted as complete last week. The deal is in connection with the establishment of the sole single-line rail network linking the US, Mexico and Canada.

“This historic combination will add capacity to the US rail network, create new competitive transportation options, support North American economic growth, and deliver important benefits to customers, employees and the environment,” CP CEO Keith Creel was quoted by the Associated Press as saying.

In September this year, STB confirmed that it has allowed the use of a boring trust for the CP-KCS transaction. This came after, the board, in August, reasserted that it would rely on pre-2001 rules while reviewing the combination, Railway Technology reported. Additionally, it will also scrutinise the waiver given to KCS in 2002 to exempt it from the 2001 merger rules. According to a statement, cited by the Associated Press on Friday, the railroad deal now awaits STB's review and is expected to continue into the fourth quarter of 2022.

However, US regulators have not agreed upon any major railroad mergers since 1990. As per AP, it is highly unclear that whether the said deal will finally be sanctioned. Canadian Pacific and Kansas City Southern have, however, said that they expect the deal to be closed by mid-December. Notably, the Mexican approval comes a week after state heads of US, Canada and Mexico met for a trilateral summit.

Biden meets Canadian PM and Mexican President before trilateral summit

US President Joe Biden, on November 18, individually met Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel López Obrador before the three convened their first trilateral summit in five years, Voice of America reported. During the Summit, the leaders pledged to take concrete actions in supporting joint goals, including the COVID-19 pandemic, advancing global health and fostering competitiveness and creating conditions for equitable growth, the White House said in a statement released after the summit.

PM Trudeau and President Obrador also separately met US Vice President Kamala Harris and exchanged views on national security and economy besides assuring cooperation on space exploration. They also jointly agreed to address the root causes of migration from Central America and need for regional approach to migration in the Western Hemisphere, VOA reported.

(With inputs from AP, Image: Unsplash/Representative)