Canadian Pacific Railway Limited (CP) announced that its shareholders voted overwhelmingly in favour of the issuance of CP common shares to Kansas City Southern (KCS) common stockholders in connection with the proposed CP-KCS  merger agreement.

"The shareholder approvals today are a key step on our path to this once-in-a-lifetime partnership to create the first U.S.-Mexico-Canada rail network," said Keith Creel, CP president and chief executive officer. "This is a transformative opportunity for CP, for KCS, and for the North American economy." 

In its statement, CP noted that its shareholders voted on two items of business at Wednesday's special meeting of shareholders: the first was an ordinary resolution to approve the issuance of up to 277,960,197 CP common shares as the share consideration under the terms of the merger agreement; the second was a special resolution to approve an amendment to CP's articles of incorporation to change its name to Canadian Pacific Kansas City Limited, a change contingent upon the approval by the U.S. Surface Transportation Board (STB) of the proposed CP-KCS combination.  

CP reported that 99.91% of its shareholders voted for the "Share Issuance Resolution," while 99.83% of them also voted for the "Name Change Resoution."

"The overwhelming support our shareholders have given today to the transaction is critical to making this combination a reality," Creel added. "In the coming days, we will be working to complete the steps required to close into the voting trust, and in the months ahead we look forward to participating in the STB's comprehensive regulatory review."

The CP chief noted that following receipt of STB approval and consummation of CP control, Canadian Pacific Kansas City will add new capacity to the U.S. rail network, create new competitive transportation options, support North American economic growth, and deliver other important benefits to customers, employees, and the environment.

As previously announced on September 15, CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately US$31 billion, which includes the assumption of US$3.8 billion of outstanding KCS debt.

On September 30, the STB confirmed that it approved the use of a voting trust for the transaction.

December 14 target

CP said 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 last month and a special meeting of KCS stockholders to vote on the merger agreement is scheduled for Friday, December 10," CP added.

"Provided the transaction is approved by KCS stockholders on Friday, the transaction is expected to close into trust two business days later on December 14, 2021."

On November 23, the STB formally accepted the CP-KCS control application and issued a procedural schedule. The STB's review of CP's proposed control of KCS is expected to be completed in the fourth quarter of 2022.