Canadian Pacific Railway, the parent company of the Canadian Pacific freight train operator, will acquire Spectra Inc. for a total of $1,875 million in cash and stock, the company announced Wednesday.
The deal, which was announced at the Canadian National Railway’s annual meeting in Ottawa, was completed earlier in the day and valued at $1 billion.
Canadian Pacific will pay $2.15 per share for Spectra, which is based in Calgary, Canada.
The combined company will be valued at about $5.5 billion.
In a statement, Canadian Pacific said it will continue to build on its strong leadership in the railroad industry and the rail sector of Canada.
Spectra has been building its infrastructure in Canada for more than two decades.
The company said the acquisition will enhance Spectra’s ability to respond to the changing needs of Canadian customers, and will deliver strong value to Canadian investors.
“We are excited to work with Canadian Pacific on a strategic acquisition that will further build on our strong track record in the rail industry, and enable us to take full advantage of the opportunities our customers and communities are experiencing,” said Spectra Chairman and CEO Tim Warkentin.
The railway company said it expects to invest $1 million per month into Spectra over the next five years.
The acquisition will help the railway company meet its goal of delivering $8 billion in annual operating revenues by 2023.
The rail company will continue operating the Canadian Northeast’s Northeast Corridor, which connects Vancouver to Toronto, and the Canada Line, which links Halifax to Toronto.
It will also operate the North Coast Railway, which runs from Vancouver to Edmonton, and serve the region’s southern communities.