CALGARY, ALBERTA, CANADA — Canadian Pacific Railway Ltd. (CP) announced Dec. 14 it has completed the acquisition of Kansas City Southern (KCS) in a transaction valued at approximately $31 billion. Under terms of the transaction, KCS stockholders will receive 2.884 CP common shares and $90 in cash for each share of KCS common stock held and $37.50 in cash for each share of KCS preferred stock held.

Following the closing of the transaction, the shares of KCS were placed into a voting trust with Dave Starling, former president and chief executive officer of KCS. Starling has been appointed the “voting trustee.” The Voting Trust, which ensures KCS will operate independently of CP, will remain in effect until the US Surface Transportation Board (STB) issues its decision on the companies’ joint railroad control application.

If approved by the STB, the transaction would create Canadian Pacific Kansas City Ltd. (CPKC), the only single-line railroad linking the United States, Mexico and Canada. The STB review of CP’s proposed control of KCS is expected to be completed in the fourth quarter of 2022. Once approved, CP and KCS expect to be fully integrated within three years, the companies said.

“Today is a historic day for our two iconic companies,” said Keith Creel, president and CEO of CP. “CPKC will become the backbone connecting our customers to new markets, enhancing competition in the US rail network, and driving economic growth across North America while delivering significant environmental benefits. We are excited to reach this milestone on the path toward creating this unique truly North American railroad.”

Patrick J. Ottensmeyer, president and CEO of KCS, added, “We are excited for the possibilities that will open to us through this combination with CP and we look forward to our next chapter.”

To fund the cash consideration of the merger, CP said its wholly-owned subsidiary, Canadian Pacific Railway Co., sold new debt of C$2.2 billion and $6.7 billion, both of which are guaranteed by CP. The debt transactions closed on Nov. 24, 2021, and Dec. 2, 2021, respectively. CP expects to incur approximately C$21 million in interest expense in the quarter from the two issuances.