Canadian Pacific, based in Calgary, in the Canadian province of Alberta, and OMERS, the benefit pension plan for municipal employees in the province of Ontario, Canada, have entered into a purchase agreement in which Canadian Pacific will acquire full ownership of the Detroit River Rail Tunnel from certain affiliates of OMERS.
The railway tunnel is under the Detroit River and connects Detroit to Windsor. The U.S. tunnel opening is located near Rosa Parks Boulevard and Abbott Street, between Hubbard-Richard and Corktown. The purchase price for the transaction is about $312 million.
“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,” says Keith Creel, president and CEO of Canadian Pacific. “This strategic acquisition combined with our recent purchase of the CMQ (Central Maine and Quebec Railway) will further integrate the eastern part of our network and create value for our shareholders.”
Canadian Pacific previously owned a 16.5-percent stake of the tunnel in partnership with OMERS. The 1.6-mile tunnel will continue to be operated by Canadian Pacific. The acquisition of the tunnel will reduce Canadian Pacific’s operating costs related to movements through the tunnel.
“OMERS first invested in the Detroit River Tunnel Partnership in 2001,” says Michael Ryder, senior managing director and head of Americas for OMERS infrastructure. “We are very proud of the value we have created with this investment for OMERS members. 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.”
The transaction is expected to close at the end of the fourth quarter.
Canadian Pacific is a transcontinental railway in Canada and the U.S. with direct links to major ports on the west and east coasts.