Canadian Pacific only suitor for Kansas City Southern after rival drops out

After a months-long drama, Canadian Pacific Railway Ltd. signed a $27.2 billion cash-and-stock deal to buy the Kansas City Southern railroad on Sept. 15 after Canadian National Railway Company conceded it could not save its own proposed $29.6-billion deal for the United States railway.

The historic deal will create the first rail network that connects Canada and Mexico. The move came shortly after an unfavorable ruling against Canadian National from the Surface Transportation Board, which must approve all rail mergers. The STB rejected the voting trust scheme Canadian National had proposed.

Canadian Pacific’s voting trust proposal was approved in May. But there are still regulatory hurdles to overcome. So far, no Canadian pacific shareholder has raised objections to the deal, as happened with Canadian National. But CP still needs to hold a shareholder vote.

The STB could also impose conditions on the deal, such as limited divestments or changes in how it charges customers, according to sources speaking with the Brainerd Dispatch.

David Murray can be reached at [email protected].