Canadian Pacific Acquires DM&E Railroad

Canadian Pacific Railway Ltd. (CP) announced in early September that it has reached an agreement to acquire Dakota, Minnesota & Eastern Railroad Corp. (DM&E) and its subsidiaries for $1.48 billion. The transaction expands CP’s current network by approximately 2,500 miles and increases its access to U.S. Midwest markets.

The deal consists of a $1.48 billion cash payment at closing and future contingent payments of up to approximately $1 billion. Future contingent payments of $350 million will become due if construction starts on the Powder River Basin expansion project prior to December 31, 2025. Further future contingent payments of up to approximately $700 million will become due upon the movement of specified volumes of coal from the Powder River Basin over the Powder River Basin extension prior to December 31, 2025.

The DM&E has been pursuing a strategy to become the third rail carrier in Wyoming’s Powder River Basin. “Canadian Pacific is excited about the prospect for growth in the coal-rich Powder River Basin,” said CP president and CEO Fred Green. “The DM&E’s favorable geographic position provides a unique ability to create an efficient and competitive additional link to midwestern and eastern utilities.”