CP shareholders back $31B purchase of Kansas City Southern

A Canadian Pacific train hauls oil westward through Banff National Park, Alberta, Canada, Sunday, Nov. 28, 2021. Refineries on the west coast of Canada have run short of crude oil following the shutdown of pipelines due to catastrophic flooding in southern British Columbia. (Frank Gunn/The Canadian Press via AP)

Canadian Pacific's $31 billion plan to acquire Kansas City Southern cleared one of its final hurdles Wednesday when CP shareholders overwhelmingly approved the deal that would create the first railroad connecting the United States, Canada and Mexico.

Ownership of the railroad, based in Missouri, is expected to change next Tuesday as long as Kansas City Southern shareholders endorse the deal later this week. Kansas City Southern won't see any major changes immediately because it will be held by a voting trust for the next year while the U.S. Surface Transportation Board scrutinizes the deal.

“The overwhelming support our shareholders have given today to the transaction is critical to making this combination a reality,” Canadian Pacific CEO Keith Creel said.

A review of the deal by U.S. regulators is expected to wrap up sometime in the fourth quarter of next year. The STB hasn't approved any major railroad mergers since the 1990s, but executives at the two railroads have said they don't expect any problems getting the merger approved. Mexican regulators signed off on the deal last month.

Kansas City Southern shareholders will get paid next week when the voting trust acquires the railroad. They will receive $90 cash and 2.884 CP shares at that point as long as they approve the deal on Friday. Canadian Pacific has also agreed to take on $3.8 billion of Kansas City Southern's debt.

Canadian Pacific prevailed in a bidding for Kansas City Southern earlier this year even though Canadian National railroad offered to pay $33.6 billion because the STB rejected part of CN's plan to acquire Kansas City Southern.

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This story was corrected to reflect that the CEOs of Kansas City Southern and Canadian Pacific have both said that they believe this deal will be approved by regulators.