Kansas City Southern shareholders approve takeover by CP Rail

The Kansas City Southern logo on a restored 1954 Kansas City Southern passenger locomotive at Union Station in Kansas City, Mo., on Nov. 5, 2004. (Norman Ng / The Kansas City Star via AP)

CALGARY -

Kansas City Southern shareholders gave a bright green light Friday to the railway's takeover by Canadian Pacific Railway Ltd.

Shareholders voted 96.6 per cent in favour at a special meeting that lasted less than 10 minutes, paving the way for the creation of the only single-line rail network connecting Canada, the United States and Mexico.

The approval follows a thumbs-up from Mexican regulators last month and from CP shareholders on Wednesday.

CP agreed in September to buy KCS in a deal valued at US$31 billion, including the assumption of US$3.8 billion of debt, following a testy battle with Canadian National Railway Co., which was also looking to acquire the U.S. railroad.

"With strong shareholder support, we are excited to complete the steps required to close the CP-KCS transaction into the voting trust, a critical milestone in the journey to make Canadian Pacific Kansas City a reality," CP chief executive Keith Creel said in a release.

The U.S. Surface Transportation Board has approved the use of a voting trust for the transaction that allows KCS shareholders to receive payment after shareholders of both companies approve the deal, but before the deal receives final approval.

KCS common stockholders will receive 2.884 CP common shares and US$901 in cash for each share of KCS common stock held, with preferred stockholders receiving US$37.50 in cash per share of preferred stock held.

CP said the payments will go ahead when the transaction closes into trust, expected on Dec. 14.

The U.S. regulatory review is expected to wrap up in the fourth quarter of 2022, CP said.

This report by The Canadian Press was first published Dec. 10, 2021.