(The Associated Press circulated the following article on September 13.)
CHICAGO — Shares of Kansas City Southern rose sharply Tuesday after the railroad company said it had settled a tax dispute with the Mexican government over a railway KCS bought earlier this year.
Shares of KCS rose $2.81, or 14 percent, to close at $22.92 on the New York Stock Exchange.
Under the settlement, Mexico will give KCS its 20 percent stake in Transportation Ferroviaria Mexicana in exchange for the cancellation of a $1.2 billion a tax refund that it has owed TFM.
In April, KCS paid Mexican partner Grupo TMM SA $660 million in cash and stock for its 51 percent stake in TFM, which operates a railway that links KCS’s U.S. and Mexican rail networks.
The Mexican Finance Ministry said Tuesday it decided to settle the tax matter after seven years of litigation with TFM, in which Mexican courts ruled in favor of the company.
KCS owns and operates 3,100 miles of track in the midwestern and southern United States.