Canadian Pacific’s acquisition of KCS railroad back on track

FILE – In this May 23, 2012, file photo, surveyors work next to Canadian Pacific Rail trains which are parked on the train tracks in Toronto. A planned shareholder vote on Canadian National’s $33.6 billion offer has been delayed, Wednesday, Sept. 1, 2021, after regulators rejected a key part of the plan, so now Kansas City Southern can consider all of its options, including a competing $31 billion offer from Canadian Pacific Railway. (Nathan Denette/The Canadian Press via AP, File)

OMAHA, Neb. (AP) — The path is now clear for Canadian Pacific’s $31 billion acquisition of Kansas City Southern railroad to move forward after Canadian National dropped out of the bidding war Wednesday.

The deal could still face tough scrutiny from regulators at the federal Surface Transportation Board, which hasn’t approved any major railroad mergers since the 1990s, but KCS shareholders will be set to get paid once shareholders of both companies and Mexican regulators approve regardless of what the STB ultimately decides.

Canadian Pacific triumphed in the bidding war even though it offered less federal regulators rejected part of CN’s plan. Canadian National will receive $1.4 billion in breakup fees for its trouble.