Canadian Pacific Railway to buy US regional railroad Dakota, Minnesota & Eastern Railroad

Mumbai: Canadian Pacific Railway Ltd (C P Rail), the country''s number two railway, has agreed to buy Dakota, Minnesota & Eastern Railroad Corp (DM&E), the largest US regional railroad, for about $1.5 billion in cash.

C P Rail, based in Calgary, Alberta, would use the acquisition to expand its network by about 2,500 miles of track and increase access to US Midwest markets.

DM&E is owned by London-based Electra Private Equity, which originally invested in the company more than 20 years ago.

CP Rail said the agreement includes a $1.48 billion cash payment at closing and future contingent payments of up to about $1 billion. The company expects the deal to close in the next 30 to 60 days.

"The DM&E is a high-quality, growing regional railroad that complements our existing franchise," C P Rail chief executive Fred Green said in a statement.

"This investment presents the opportunity for future growth through further expansion of our network and is accretive to our EPS in 2008," he added.