Calgary Alberta - Canadian Pacific Railway Limited (CP) today welcomed the results of a vote by Kansas City Southern (KCS) stockholders in strong support of the proposed CP/KCS combination.
 
"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 President and Chief Executive Officer.
 
"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 shareholders voted in favor of the combination during a special meeting on Wednesday, 8 Dec 2021.
 
Today, KCS stockholders also voted in favour of a proposal to adopt the CP/KCS merger agreement.
 
The transaction is expected to close into trust on 14 Dec 2021.
 
At the closing into trust, KCS common stockholders will receive 2.884 CP common shares and $90 in cash for each share of KCS common stock held and KCS preferred stockholders will receive $37.50 in cash for each share of KCS preferred stock held, and, following completion of certain transactional steps, all shares of capital stock of the successor to KCS will be placed into trust.
 
As previously announced on 15 Sep 2021 CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $31 billion, which includes the assumption of $3.8 billion of outstanding KCS debt.
 
The transaction, which has the unanimous support of both boards of directors, values KCS at $300 per share, representing a 34 percent premium, based on the CP closing price on 9 Aug 2021, the date prior to which CP submitted a revised offer to acquire KCS, and KCS's unaffected closing price on 19 Mar 2021.[2]
 
On 30 Sep 2021 the U.S. Surface Transportation Board (STB) reaffirmed that it approved the use of a voting trust for the transaction.
 
The conditions to closing into voting trust include receipt of approval from the shareholders of both companies along with the satisfaction of other customary closing conditions, including receipt of Mexican regulatory approvals.
 
Required Mexican regulatory approvals were received in November.
 
CP control of KCS remains subject to the approval of the STB.
 
On 23 Nov 2021 the STB formally accepted the CP/KCS control application and issued a procedural schedule.
 
The STB's review is expected to be completed in the fourth quarter of 2022.
 
Additional information regarding the combination can be found in the management proxy circular dated 1 Nov 2021 which has been filed with both Canadian and U.S. securities regulators, including with the U.S. Securities and Exchange Commission.
 
For information on the benefits of a CP/KCS combination, visit FutureForFreight.com.
 
[1] Except where noted, all figures are in U.S. dollars.
 
[2] Based on KCS closing share price of $224.16 as of 19 Mar 2021 and CP closing share price of CAD$91.50 (at 1.2565 FX rate) as of 9 Aug 2021.
 
Author unknown.