Topic: How To Invest

The Successful Investor Hotline – Friday, March 26, 2021

Article Excerpt

CANADIAN PACIFIC RAILWAY LTD., $450.08, Toronto symbol CP, is still our #1 Conservative Buy for 2021. Through their shares, investors tap a company shipping freight over a 22,000-kilometre rail network between Montreal and Vancouver. It also links to hubs in the U.S. Midwest and Northeast. The company has now agreed to acquire U.S.-based railway Kansas City Southern (New York symbol KSU). Its rail network of roughly 11,400 kilometres extends from the U.S. Midwest and Southeast into Mexico. KCS investors will receive 0.489 of a CP share and $90.00 U.S. in cash for each share they hold. As a result, they will hold roughly 25% of the combined company. If you include KCS’s debt of $3.8 billion U.S., the purchase is worth roughly $29 billion U.S. CP will have to borrow $8.6 billion to fund this deal, which will increase its debt to $20.2 billion. That’s equal to 34% of the company’s current market cap of $59.6 billion. The combined railway—called Canadian Pacific Kansas City (CPKC)—will connect…

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