ONAPRIL 21 Kansas City Southern and Grupo TMM of Mexico announced that they had reached agreement to merge their three railways, KCSR, Texas Mexican Railway and TFM SA de CV, under the control of a single holding company, NaftaRail, which will be quoted on the New York StockExchange. The deal must be approved by both sets of shareholders, the Surface Transportation Board and the Mexican Foreign Investment Commission.

Under the agreement, KCSR will be restructured into Nafta Rail. Grupo TMM subsidiary TMM Multimodal will receive a 22% stake in the holding company and US$200m in cash in exchange for its 80% stake in TFM and majority holding in Tex-Mex. The Mexican government still holds a 20% stake in TFM, which has a 50-year concession to run the country’s Northeast network until 2047 and a 50-year extension option.

Nafta Rail will have its head offices in Kansas City, but the operating railways will continue to be based at their three existing headquarters in Kansas City, Laredo and Mexico City.