Mexican regulators have approved Canadian Pacific Railway Ltd.’s proposed $28 billion purchase of Kansas City Southern , the countries’ No. 3 railroad and the No. 4 most valuable company by stock market value.
Kansas City Southern, which will join Canada’s two largest railroad operators, will remain based in Kansas City, Missouri. The deal is expected to close by the end of July.
The Mexican regulator said it had provided a “guidance document” and requested feedback on the agreement. It will make a final ruling and issue an approval or disapproval by July 31.
“We are very pleased with the approval,” CEO Keith Creel said in a statement. “We look forward to closing the transaction and creating a stronger and more efficient North American rail system.”
The acquisition of Kansas City Southern would put Canada’s two largest railroads in a position to offer better connections to Mexico, where close proximity has created significant growth. The Canadian and Mexican governments worked closely to ensure the regulatory approval process.
Canada’s National Energy Board and U.S. Justice Department had already approved the deal.
The additional North American railcar capacity could allow the railroads to carry rising freight volumes for shippers of other commodities, like fertilizer and crude oil. Carloads of grains have dropped because of robust demand for U.S. soybeans, Canadian Pacific said.