KSU - Canadian Pacific's Megadeal for Kansas City Southern Is Done... Sorta
The yearlong saga by Kansas City Southern (NYSE: KSU) to find a buyer came to an end on Dec. 14, when Canadian Pacific Railway (NYSE: CP) completed its deal to acquire Kansas City stock for $31 billion. But what happens next for the railroads is far from clear, and investors need to remain on alert as the next year plays out.
Kansas City Southern shareholders received $90 in cash and 2.884 Canadian Pacific shares for each share they held. As a result, Kansas City Southern no longer trades on the New York Stock Exchange. But the railroad itself will not come under Canadian Pacific control for at least a year. Rather, the operations will roll into a special voting trust that's required to be arm's length from Canadian Pacific while regulators decide if a merger should be allowed.
The convoluted trust structure is awkward, at best, and could lead to some real issues for Canadian Pacific through the end of 2022. Here's what investors need to know about North America's potential new railroad company and how long it might take until we find out if the deal was worth the risk.
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Canadian Pacific's Megadeal for Kansas City Southern Is Done... Sorta