Canadian Pacific takeover of Kansas City Southern approved by STB
RalphCoulter

The Surface Transportation Board announced its approval of Canadian Pacific Railwayâs (NYSE:CP) acquisition of Kansas City Southern on Wednesday.
The decision noted that while both operators are Class I railroads, they are far smaller than peers like Union Pacific (UNP), CSX Corp. (CSX), Canadian National Railway (CNI), and Norfolk Southern (NSC). Even after the merger, the new Canadian Pacific Kansas City railroad will remain the smallest Class I railroad. 
âThe Board expects that this new single-line service will foster the growth of rail traffic, shifting approximately 64,000 truckloads annually from North Americaâs roads to rail, and will support investment in infrastructure, service quality, and safety,â the decision explained, outlining the benefits. âThe transaction is also expected to drive employment growth across the CPKC system, adding over 800 new union-represented operating positions in the United States.â
The merger is also expected to open up passenger routes for Amtrak as it creates the first railroad providing single-line service spanning Canada, the United States, and Mexico. Amtrak was noted as an endorser of the merger. 
The Board did however note that it is âimposing numerous conditions designed to protect competitionâ despite approving the deal. Among these safeguards are clauses that demand that gateways must remain âopen on commercially reasonable termsâ and sets limits on rail traffic diversions. Environmental and noise constraints were also placed on the railroad. The decision also noted that the STB âis establishing an unprecedented seven-year oversight period along with extensive data-reporting requirementsâ to ensure these conditions are met.
Canadian Pacific (CP) stock surged 6.96% shortly after the market open on the news.
Read more on overall sentiment swirling around the rail space amid derailment concerns.