CP to acquire full ownership of Detroit River Rail Tunnel for US$312 million
The railway tunnel between Detroit and Windsor, Ont., on Thursday, Aug. 30, 2018. (Chris Campbell / CTV Windsor)
WINDSOR, ONT. -- Canadian Pacific has entered into a purchase agreement to acquire full ownership of the Detroit River Rail Tunnel for about US$312 million.
CP announced the deal on Friday.
CP previously owned a 16.5 per cent stake of the tunnel in partnership with OMERS, the defined benefit pension plan for municipal employees in the province of Ontario,
The 2.6-kilometre tunnel linking Windsor and Detroit will continue to be operated by CP. The acquisition of the tunnel will reduce CP's operating costs related to movements through the tunnel.
"This is an important corridor for CP and by taking full ownership, we can better operate the asset to the benefit of our customers and the North American supply chain," said CP president and CEO Keith Creel. "This strategic acquisition combined with our recent purchase of the CMQ will further integrate the eastern part of our network and create value for our shareholders."
The transaction is currently expected to close at the end of Q4 2020 and remains subject to customary closing conditions, including regulatory approvals.
"OMERS first invested in the Detroit River Tunnel Partnership in 2001. We are very proud of the value we have created with this investment for OMERS members," said Michael Ryder, senior managing director and head of Americas for OMERS Infrastructure. "Our work with CP represents a strong example of our global investment approach in action – collaborating with a trusted strategic partner as long-term owners and developers of a major international transportation link."