Canadian Pacific completed the purchase of Kansas City Southern (KCS) on Tuesday, creating Canadian Pacific Kansas City Limited (CPKC).
The acquisition had an enterprise value of approximately $ 31 billion.
KCS shareholders will receive 2,884 CP common shares and $ 90 cash for each share of KCS common stock they own and $ 37.50 cash for each share of KCS preferred stock they own.
Immediately after the closing of the acquisition, KCS shares were placed in a voting trust with Dave Starling, former president and CEO of KCS, appointed as the voting Trustee.
Canadian Pacific Kansas City
In addition, the Voting Trust, which guarantees that KCS will operate independently of CP, will remain in effect until the United States Surface Transportation Board (STB) issues its decision on the companies’ joint request for rail control.
Thus, 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.
STB’s review of the control proposed by CP 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, president and CEO of CP.
«Canadian Pacific Kansas City will become the backbone connecting our customers to new markets, enhancing competition on the United States rail network, and driving economic growth in North America while providing significant environmental benefits,» said Patrick. J. Ottensmeyer, President and CEO of KCS.
The expected benefits of the business combination will not be realized until the STB approves CP’s control of the KCS railways.
After obtaining control approval from the STB, the two companies hope to achieve full integration over the next three years, unlocking the benefits of the combination.
Canadian Pacific is a transcontinental railroad in Canada and the United States with direct links to the main ports on the east and west coasts.
For its part, Kansas City Southern is a transportation holding company that has investments in railroads in the US, Mexico and Panama.