Canadian Pacific Railway Limited (CP)  and Kansas City Southern (KCS) has announced that the Surface Transportation Board (STB) has accepted the joint CP-KCS merger application as complete.

In a brief statement, CP said the STB also set a procedural schedule for the regulatory review that calls for final briefs on July 1, 2022.

CP and KCS anticipate that the STB review of CP's proposed control of KCS will be completed in the fourth quarter of 2022. 

"We are pleased that the Board has accepted our comprehensive joint application and declared it complete," said Keith Creel, CP president and chief executive officer.

"We look forward to moving forward with a robust regulatory review of this historic combination that will add 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," he added.

Patrick J. Ottensmeyer, KCS president and chief executive officer, also welcomed STB's move noting the development as an "important milestone."

"We have reached another important milestone and look forward to playing our part as the STB begins its formal review of the joint application for our historic combination with CP," Ottensmeyer said.

"I would like to thank all those involved in submitting our successful application as part of our continuing work to bring our two companies together."

Mexico approval

Separately, CP and KCS also announced that it secured the required regulatory pre-transaction control approvals from the Mexican Federal Economic Competition Commission (COFECE) and the Mexican Federal Telecommunications Institute (IFT) for the previously announced proposed combination of KCS and CP.

"This important milestone marks the next step on our path to creating the first single-line rail network linking the US, Mexico and Canada," said Keith Creel, CP President and Chief Executive Officer. "This historic combination will add capacity to the U.S. rail network, create new competitive transportation options, support North American economic growth, and deliver important benefits to customers, employees and the environment."

The transaction remains subject to satisfaction of customary closing conditions, including approval from stockholders of both companies. CP's and KCS' stockholders are scheduled to vote on the proposed transaction on December 8 and 10, 2021, respectively.

The firms noted that provided the transaction is approved by CP and KCS stockholders, it is expected to close two business days later on December 14.

On September 30, STB confirmed that it has approved the use of a voting trust for the CP-KCS combination. In August 2021, the STB reaffirmed that the pre-2001 rules would govern its review of the CP-KCS transaction.

In April 2021, the STB determined it would review the CP-KCS combination under the merger rules in existence prior to 2001 and the waiver granted to KCS in 2001 to exempt it from the 2001 merger rules. CP's ultimate acquisition of control of KCS' U.S. railways is subject to the approval of the STB.

The STB review of CP's proposed control of KCS is expected to be completed in the fourth quarter of 2022.