KCSM bullish on infra investments after merger with CP

The acquisition of Kansas City Southern (KCS) by rail operator Canadian Pacific (CP) could translate into bigger investment opportunities for Mexico once the merger is approved by the US regulator, the Surface Transportation Board (STP).

“Canadians might bring more cash for more projects in Mexico,” Kansas City Southern México (KCSM) infrastructure director José Manuel Fragoso (pictured) said Tuesday during the Exporail 2022 event in Mexico City.

Following his presentation, Fragoso told BNamericas that the Mexico subsidiary is bullish on the new opportunities the deal could bring. 

“It is a very positive thing for the country,” he said, highlighting the value it presents for customers being able to use a Mexico-US-Canada rail corridor.

On December 14, KCS said it had completed its sale to CP. 

“The transaction represents an enterprise value of approximately US$31bn,” it said in a statement, adding that its shares were placed into a voting trust, where they remain until STB “issues its decision on the companies’ joint railroad control.”

The US regulator has not approved the deal yet. 

“Whether the purchase happens or not, we will continue doing the same. The projects I presented today will be carried out with our own money and the approval of [Mexico’s infrastructure, communications and transport ministry] SICT,” Fragoso said. 

If the merger moves forward, Fragoso said on stage, CP will review the portfolio of KCSM's projects as part of the acquisition process. Yet, he later clarified to BNamericas that this review would not affect this year’s US$120mn Mexican investment plans announced in June.

“The plan won’t change,” he said. 

Portfolio

During his presentation, Fragoso highlighted five projects. 

The first involves the second international rail bridge at the Laredo-Nuevo Laredo crossing on the Texas-Tamaulipas border, for which the company expects to start construction next week. Works should finish in 2024. 

Another project is the Celaya bypass in Guanajuato state, for which the company announced in July that 4bn pesos will be invested in its final stage. 

And last are the San Luís rail bridge in San Luis Potosí state, which the company expects to complete by the first half of next year; the eastern Monterrey bypass in Nuevo León state, for which KCSM's contributions are around 90% complete; and the satellite yard in Salinas Victoria, also in Nuevo León. 

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