Canadian Pacific Welcomes KCS Stockholder Vote on Adopting Merger Agreement

Canadian Pacific Railway Limited (“CP”) welcomed the results of a vote by Kansas City Southern (“KCS”) stockholders in strong support of the proposed CP-KCS combination.

“This week, shareholders of both CP and KCS overwhelmingly supported this transformative proposal to create the first U.S.-Mexico-Canada rail network,” said Keith Creel, CP President and Chief Executive Officer. “With strong shareholder support, we are excited to complete the steps required to close the CP-KCS transaction into the voting trust, a critical milestone in the journey to make Canadian Pacific Kansas City a reality.”

CP shareholders voted in favor of the combination during a special meeting on Wednesday, Dec. 8, 2021. Today, KCS stockholders also voted in favour of a proposal to adopt the CP-KCS merger agreement.

The transaction is expected to close into trust on Dec. 14, 2021. At the closing into trust, KCS common stockholders will receive 2.884 CP common shares and $90(1) in cash for each share of KCS common stock held and KCS preferred stockholders will receive $37.50 in cash for each share of KCS preferred stock held, and, following completion of certain transactional steps, all shares of capital stock of the successor to KCS will be placed into trust.

As previously announced on Sept. 15, 2021, CP has agreed to acquire KCS in a stock and cash transaction representing an enterprise value of approximately $31 billion, which includes the assumption of $3.8 billion of outstanding KCS debt. The transaction, which has the unanimous support of both boards of directors, values KCS at $300 per share, representing a 34% premium, based on the CP closing price on Aug. 9, 2021, the date prior to which CP submitted a revised offer to acquire KCS, and KCS’s unaffected closing price on March 19, 2021.(2)

On Sept. 30, 2021, the U.S. Surface Transportation Board (“STB”) reaffirmed that it approved the use of a voting trust for the transaction. 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 in November.

CP control of KCS remains subject to the approval of the STB. On Nov. 23, 2021, the STB formally accepted the CP-KCS control application and issued a procedural schedule. The STB’s review is expected to be completed in the fourth quarter of 2022.

Additional information regarding the combination can be found in the management proxy circular dated Nov. 1, 2021, which has been filed with both Canadian and U.S. securities regulators, including with the U.S. Securities and Exchange Commission (“SEC”).

For information on the benefits of a CP-KCS combination, visit FutureForFreight.com.

1) Except where noted, all figures are in U.S. dollars.

2) Based on KCS closing share price of $224.16 as of March 19, 2021 and CP closing share price of CAD$91.50 (at 1.2565 FX rate) as of Aug. 9, 2021.

About Canadian Pacific

Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. CP provides North American customers a competitive rail service with access to key markets in every corner of the globe. CP is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit www.cpr.ca to see the rail advantages of CP. CP-IR

Source: Canadian Pacific Railway Limited