3 Railroad Stocks To Watch Amid Canadian Pacific And Kansas City Southern Merger

Canadian Pacific Railway Ltd (NYSE: CP) and Kansas City Southern (NYSE: KSU) announced on Sunday they would merge in a deal valued at about $29 billion in cash and shares.

What Happened: The new company, Canadian Pacific Kansas City, will create a Canada-Mexico-U.S. railroad with a combined 20,000 miles of rail.

Canadian Pacific Kansas City will be a larger competitor to other rail service providers and will ease supply chain difficulties between the three member countries of the United States-Mexico-Canada Agreement (USMCA). It will also provide the companies’ customers with an eco-friendlier alternative to truck transportation, according to Canadian Pacific's press release.

Why It Matters: The Canadian Pacific Kansas City rail service will have three main competitors to keep on watch:

Canadian National Railways (NYSE: CNI), headquartered in Montreal, Quebec operates 20,000 miles of rail across Canada, the Midwest and the Southern United States and through Mexico.

Canadian National has a market cap of $80.89 billion and was trading down 2.25% at $113.90 at last check.

Union Pacific Corporation (NYSE: UCP), headquartered in Omaha, Nebraska, boasts 32,340 miles of route track across the Midwest, West and Southwestern United States.

Union Pacific has a market cap of $139.37 billion and was trading down 1.87% at $206.86 at last check.

Norfolk Southern Corp. (NYSE: NSC), headquartered in Norfolk, Virginia, operates 19,500 route miles in 22 states and the District of Columbia.

Norfolk Southern has a market cap of $66.24 billion and was trading up 0.96% at $262.96 at last check.

(Photo: Canadian Pacific Railway)