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November 17, 2021 10:30 AM, EST

Canadian Pacific Railway Starts Bond Sale for KC Southern Deal

Canadian Pacific Railway Starts Bond Sale for KC Southern Deal A Canadian Pacific Railway locomotive in Calgary, Alberta. One of the biggest Canadian deals of the past decade is Canadian Pacific Railway Ltd.’s acquisition of Kansas City Southern. (Alex Ramadan/Bloomberg)

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Canadian Pacific Railway Ltd. is tapping the U.S. investment-grade bond market to help fund its acquisition of Kansas City Southern.

The Calgary-based railroad operator is selling bonds in five parts, according to a person familiar with the matter. The longest portion of the offering, a 30-year security, may yield around 140 basis points above Treasuries, said the person, who asked not to be identified as the details are private.

Canadian Pacific won a buyout war for Kansas City Southern in September, agreeing to acquire the U.S.-based railroad in a $27 billion cash and stock transaction that will create the first railroad to operate in the U.S., Canada and Mexico.

Canadian Pacific shareholders will meet on Dec. 8 to vote on the merger agreement.

Bank of Montreal and Goldman Sachs Group Inc. are managing the sale, the person said.

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