CP provides updated outlook capturing transaction-related financial impacts

Canadian Pacific Railway Limited (“CP”) announced the completion of its acquisition of Kansas City Southern (“KCS”). The transaction represents an enterprise value of approximately US$31 billion. KCS stockholders will receive 2.884 CP common shares and US$90 in cash for each share of KCS common stock held and US$37.50 in cash for each share of KCS preferred stock held.

Immediately upon the closing of the acquisition, the shares of KCS were placed into a voting trust with Dave Starling, former KCS President and CEO, appointed as the Voting Trustee. The Voting Trust, which ensures KCS will operate independently of CP, will remain in effect until the U.S. Surface Transportation Board (“STB”) issues its decision on the companies’ joint railroad control application. The STB’s approval of CP’s control of KCS would create Canadian Pacific Kansas City Limited (“CPKC”), the only single-line railroad linking the United States, Mexico and Canada. The STB review of CP’s proposed control of KCS is expected to be completed in the fourth quarter of 2022. 

“Today is a historic day for our two iconic companies,” said Keith Creel, CP President and Chief Executive Officer. “CPKC will become the backbone connecting our customers to new markets, enhancing competition in the U.S. rail network, and driving economic growth across North America while delivering significant environmental benefits. We are excited to reach this milestone on the path toward creating this unique truly North American railroad.” 

“As a Board and management team, we are proud of the countless contributions and achievements of all those who work for Kansas City Southern,” said Patrick J. Ottensmeyer, KCS President and Chief Executive Officer. “We are excited for the possibilities that will open to us through this combination with CP and we look forward to our next chapter.”

Expected benefits from the business combination will not be realized until the STB approves CP’s control of KCS’ railroads. Upon obtaining control approval from the STB, the two companies expect to achieve full integration over the ensuing three years, unlocking the benefits of the combination.