No loss of jobs in Calgary following “historic” $ 25 billion merger: CEO of CP Rail

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No loss of jobs in Calgary following


The cash-and-stock agreement would create a 20,000-mile rail network, the first to link Canada, the United States and Mexico.

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The “historic” US $ 25 billion purchase by Canadian Pacific from US Railroad Kansas City Southern on Sunday will not result in job losses in Calgary, the company’s CEO said.

“The impact in Calgary will only be positive. There are certainly no consolidation plans, ”Keith Creel, President and CEO of CP, told Postmedia.

“Calgary is and will remain a global headquarters and our headquarters. We have been there since 1996. We are committed to the city and its people. It strengthens the business and deepens that resolve and commitment. ”

The cash-and-stock agreement would create a 20,000-mile rail network, the first to link Canada, the United States and Mexico. It is the largest merger and acquisition of 2021 to date.

CP’s rail network would expand to include connections from Kansas City Southern through the US Midwest, to ports along the Gulf of Mexico and into Mexico.

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The agreement follows the new Canada-United States-Mexico trade pact, which came into effect last July. Creel said the move provided supply chain assurance, something particularly vital throughout the COVID-19 pandemic.

“You have a one-line opportunity to initiate a move that comes from Alberta and goes all the way to Mexico City or Monterrey. It’s convincing, ”he said.

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“There are a multitude of business benefits that Canadian producers will be able to derive from the unique opportunity this combination creates that, frankly, did not exist before.

Installation of CP Rail in Ogden. Canadian Pacific Railway agreed to buy Kansas City Southern for US $ 25 billion. Sunday March 21, 2021. Photo par Brendan Miller / Postmedia

The deal comes two months after US President Joe Biden canceled the Keystone XL pipeline on day one in office.

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However, the move in crude oil did not motivate the transaction, Creel said, with the industry accounting for only about five percent of CP’s business. But it added connections to Hardisty, Alta., Where the existing Keystone XL pipeline begins, allowing more possibilities to transport crude oil by rail.

With a market value of $ 50.6 billion, CP is the second-largest railway operator in Canada, behind Canadian National Railways.

Its main driver of income is grain transport, which accounts for around 24% of total freight revenues in 2020.

Alberta Premier Jason Kenney posted his reaction to the deal on Twitter, saying he spoke with CP about the deal.

He praised the deal, saying it made Calgary the world headquarters of the only fully integrated continental railroad in North America.

“The combined rail network will give CP direct access to the US Gulf Coast and beyond, allowing it to seamlessly transport energy from Alberta directly to refineries on the Gulf Coast. Mexico, thereby improving the economy of crude by rail, ”Kenney said.

“If approved, this transaction will be good news for the Alberta economy, expanding one of our largest employers while increasing access to our largest export customers.

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Scott Crockatt, vice-president of the Business Council of Alberta, said the initial response from Alberta’s business community was overwhelmingly positive.

“We’re talking about jobs and investment growth going forward, and there’s every reason to believe that a significant portion of that will go to places with head offices,” said Crockatt.

“From a trade and export standpoint, I think it’s potentially huge. Since Alberta has been in existence, market access and getting our various products to market has been one of our main challenges. The fact that the first rail line connecting Canada, the United States and Mexico is owned by a company from Calgary, I consider that only positive.

The deal has yet to be approved by the relevant regulatory agencies. Previous foreign acquisitions by Canadian rail companies have met with opposition in the United States, including an offer by CN to buy Burlington Northern Santa Fe, owned by Warren Buffett, which was blocked by US antitrust authorities in 1999- 2000.

Creel, who will continue to serve as CEO of the combined company, said the deal was different from previous failed ones.

“It’s all about pro-service and pro-competition if you’re going to do a consolidation. This situation is unique in that it concerns both areas, ”he said.

“From start to finish, there is no overlap. We’re not in direct competition, so it’s literally a hand-in-hand connection with Kansas City, where we already co-own and operate a terminal. ”

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A train is seen along the tracks at Ogden.  Canadian Pacific Railway agreed to buy Kansas City Southern for US $ 25 billion.  Sunday March 21, 2021.
A train is seen along the tracks at Ogden. Canadian Pacific Railway agreed to buy Kansas City Southern for US $ 25 billion. Sunday March 21, 2021. Photo par Brendan Miller / Postmedia

This massive merger is the third of its kind involving a Calgary company in the past five months.

In October, Cenovus Energy announced it would purchase Husky Energy in an all-equity transaction valued at $ 23.6 billion.

And last week, Rogers Communications closed a $ 20 billion purchase of Shaw Communications, which is expected to create 1,800 net new jobs in the province.

“Three mergers. . . (involving companies), all based in Calgary, is really interesting, ”said Crockatt. “What also interests me is that it’s in three very distinct sectors: rail, communications, and oil and gas.

“It underscores that our businesses are in this constant global competition for investments, jobs and head offices.”

– With files from Reuters

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Twitter: @jasonfherring



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