The deal comes amid expectations of a pick-up in U.S.-Mexico trade after Joe Biden replaced Donald Trump as U.S. president, the report said.
Kansas City Southern’s board has approved the bid and the two companies have informally informed the U.S. Surface Transportation Board, whose approval will be necessary for the deal, the FT said.
The transaction is expected to be announced on Sunday, the newspaper said, citing people with knowledge of the matter.
Canadian Pacific and Kansas City Southern did not immediately respond to Reuters requests for comment.
Calgary-based Canadian Pacific is Canada’s No. 2 railroad operator, behind Canadian National Railway Co Ltd, with a market value of $50.6 billion. Kansas City Southern has domestic and international rail operations in North America, focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico.
Canadian Pacific owns and operates a transcontinental freight railway in Canada and the United States. Grain haulage is the company’s biggest revenue driver, accounting for about 58% of bulk revenues and about 24% of total freight revenues in 2020.
Canadian railroad operators’ attempts to buy U.S. rail companies have met limited success due to antitrust concerns.
Canadian Pacific’s latest attempt to expand its U.S. business comes after it dropped a hostile $28.4 billion takeover bid for Norfolk Southern Corp. in April 2016. Canadian Pacific’s merger talks with CSX Corp, which also owns a large network across the eastern United States, failed in 2014.
A bid by Canadian National Railway Co, the country’s biggest railroad, to buy Warren Buffett-owned Burlington Northern Santa Fe was blocked by U.S. antitrust authorities in 1999-2000.