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Kansas City Southern and Texas Mexican Railway merge to form NAFTA RAIL!?


fr8lover

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K.C. Southern, Grupo TMM to Form Railway

Associated Press

 

KANSAS CITY, Mo. -Kansas City Southern Industries Inc. and Mexico's Grupo TMM SA have agreed to combine their railways to form NAFTA Rail.

 

Under the deal announced Monday, Kansas City Southern will change its name to NAFTA Rail and manage Kansas City Southern Railway Co., Texas Mexican Railway Co. and TFM. The new holding company will be based in Kansas City.

 

The transaction must be approved by regulators in both countries and shareholders.

 

The railroads already were linked physically. Kansas City Southern also has significant investments in the Mexican railways.

 

The deal calls for TMM Multimodal, a subsidiary of Grupo TMM, to receive 18 million shares, or 22 percent of the new company, $200 million in cash and a potential incentive payment of between $100 million and $180 million.

 

Shares of Kansas City Southern fell 71 cents to close at $11.06 in trading Monday on the New York Stock Exchange. Shares of Grupo TMM rose 3 cents to close at $3.74.

 

Michael R. Haverty, Kansas City Southern's chairman, president and chief executive officer, will hold the same positions with the new company. Jose Serrano, chairman and chief executive officer of Grupo TMM, will serve as vice chairman of NAFTA Rail.

 

Haverty said common control of the three railroads will make NAFTA Rail a stronger competitor in the hauling of goods between the United States, Mexico and Canada.

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