Canadian Pacific Railway (NYSE: CP) has inked a $312 million deal to acquire full ownership of the cross-border Detroit River Rail Tunnel from an Ontario pension fund affiliate, the company announced on Friday.
CP has an existing 16.5% stake in the tunnel and will acquire the remaining interest from OMERS Infrastructure, an affiliate of the Ontario Municipal Employees Retirement System pension fund. The railway expects to reduce its costs to use the cross-border U.S.-Canada railway link.
“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,” CP President and CEO Keith Creel said in a statement.
The Detroit River Rail Tunnel runs 1.6 miles, linking Detroit and Windsor. CP currently operates the tunnel and will continue to do as the full owner.
The deal is expected to close in the fourth quarter. In June, CP received approval to complete the acquisition of Central Maine & Quebec (CMQ) Railway, expanding its reach in eastern Canada.