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Canadian Pacific announced today it will acquire full ownership of the Detroit River Rail Tunnel for $312 million under an agreement with OMERS, the Ontario benefit pension plan.
CP previously owned a 16.5% stake in the tunnel through a partnership with OMERS. The Class I will continue to operate the 1.6-mile tunnel linking Windsor, Ontario, and Detroit. The tunnel acquisition will reduce railroad's operating costs related to movements through the tunnel, CP officials said in a press release.
"This strategic acquisition combined with our recent purchase of the [Central, Maine & Quebec Railway] will further integrate the eastern part of our network and create value for our shareholders," said CP President and Chief Executive Officer Keith Creel.
OMERS first invested in the Detroit River Tunnel partnership in 2001.
"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," said Michael Ryder, the pension plan's senior managing director.
The sale, which is subject to regulatory and customary closing conditions, is expected to be wrapped up by year's end.