Dec 10, 2021
K.C. Southern shareholders approve takeover by CP Rail
, BNN Bloomberg
K.C. Southern shareholders approve takeover by CP Rail
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Kansas City Southern (KCS) shareholders voted overwhelmingly on Friday to approve the takeover by Canadian Pacific Railway Ltd., a key milestone that should soon see the two companies combine to be a pan-North American railroad giant.
About 99.6 per cent of KCS shareholders voted in favour of the takeover deal during a special shareholder meeting on Friday. CP Rail shareholders also overwhelmingly voiced their support for the deal in a meeting earlier this week.
“This week, shareholders of both CP and KCS overwhelmingly supported this transformative proposal to create the first U.S.-Mexico-Canada rail network,” said Keith Creel, CP Rail president and chief executive officer, in a statement. “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.”
A voting trust that should pay KCS shareholders out is expected to close on Dec. 14 although the deal still needs final regulatory approval. Once the trust closes, each KCS share will be swapped for 2.884 common shares in CP Rail and US$90 in cash. Based on CP Rail's closing value Friday, that comes to US$299.32 for each KCS share.
However, KCS will continue to operate independently until the U.S. Surface Transportation Board decides whether to approve CP Rail's takeover of the U.S. railroad operator. Both companies expect the U.S. STB to announce its decision on the deal by the fourth quarter of 2022. Mexican regulators have already given their green light to the transaction.
Once the deal finally closes, the combined company - which will be formally named Canadian Pacific Kansas City Ltd. - will link a rail network that stretches across Canada, through the U.S. Midwest, and deep into industrial Mexico. CP Rail's main rival, Canadian National Railway Co., previously bid US$325 a share for KCS earlier this year but the U.S. STB scuttled a planned voting trust arrangement as it was deemed to not be in the public interest.
