Shareholders approve Canadian Pacific acquisition of KCS

Shareholders on Dec. 10 approved the $27.2 billion acquisition of Kansas City Southern by Canadian Pacific Railway, although the integration would not occur until the fourth quarter of 2022 after final US regulatory approval.

The combined "Canadian Pacific Kansas City" with a Calgary headquarters would create the only end-to-end rail network from the Canadian oil sands into Mexico, including crude-by-rail to the US Gulf Coast and refined production shipments into Mexico. The CP-KCS combination is expected to prove more beneficial thanks to the revised United States-Mexico-Canada Agreement trade deal.

KCS shareholders approved the deal Dec. 10 with 99.6% of the votes cast in favor, while CP shareholder also approved the deal on Dec. 8.

Now the deal must await support from the US Surface Transportation Board following a more thorough regulatory review.

The CP-KCS deal came to fruition after a roughly six-month bidding war in which KCS spurned CP for a larger offer from the bigger rival Canadian National, only to turn back to CP after the STB rejected the necessary voting trust for CN because of anti-competition concerns.

With only seven major freight railroad companies left in North America, CP's regulatory argument is that only the two smallest, CP and KCS, should be allowed to merge because their networks do not overlap and they meet neatly in Kansas City, Missouri. Canadian National has more routes that run parallel with the KCS network.