FORWARD LOOKING STATEMENTS This communication contains certain - PowerPoint PPT Presentation

FORWARD LOOKING STATEMENTS This communication contains certain forward-looking information within in commodity prices; uncertainty surrounding timing and volumes of the meaning of applicable securities laws relating, but not limited, to commodities being shipped via CP; inflation; changes in laws and Canadian Pacific Railway Limited’s (“CP”) proposal to Norfolk Southern regulations, including regulation of rates; changes in taxes and tax Corporation (“NS”) regarding a possible business combination, the rates; potential increases in maintenance and operating costs; anticipated results and benefits of the proposed transaction and matters uncertainties of investigations, proceedings or other types of claims and relating to regulatory approvals and changes. This forward-looking litigation; labour disputes; risks and liabilities arising from derailments; information also includes, but is not limited to, statements concerning transportation of dangerous goods; timing of completion of capital and expectations, beliefs, plans, goals, objectives, assumptions and maintenance projects; currency and interest rate fluctuations; effects of statements about possible future events, conditions, and results of changes in market conditions and discount rates on the financial operations or performance. Forward-looking information may contain position of pension plans and investments; and various events that statements with words or headings such as “financial expectations”, “key could disrupt operations, including severe weather, droughts, floods, assumptions”, “anticipate”, “believe”, “expect”, “plan”, “will”, “outlook”, avalanches and earthquakes as well as security threats and “should” or similar words suggesting future outcomes. governmental response to them, and technological changes. The foregoing list of factors is not exhaustive. Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. These and other factors are detailed from time to time in reports filed by Forward-looking information is not a guarantee of future performance. By CP with securities regulators in Canada and the United its nature, forward-looking information involves numerous assumptions, States. Reference should be made to “Management’s Discussion and inherent risks and uncertainties that could cause actual results to differ Analysis” in CP’s annual and interim reports, Annual Information Form materially from the forward-looking information, including but not limited to and Form 40-F. Readers are cautioned not to place undue reliance on the following factors: the ability of the parties to agree to the terms of a forward-looking information. Forward-looking information is based on proposed transaction; the ability of the parties to obtain the required current expectations, estimates and projections and it is possible that regulatory approvals; the ability to recognize the financial and operational predictions, forecasts, projections, and other forms of forward-looking benefits of the transaction; changes in business strategies; general North information will not be achieved by CP. Except as required by law, CP American and global economic, credit and business conditions; risks in undertakes no obligation to update publicly or otherwise revise any agricultural production such as weather conditions and insect populations; forward-looking information, whether as a result of new information, the availability and price of energy commodities; the effects of competition future events or otherwise. and pricing pressures; industry capacity; shifts in market demand; 2

ADDITIONAL IMPORTANT INFORMATION This communication is neither an offer to purchase or exchange nor a CP and its directors, executive officers and other employees may be solicitation of an offer to sell securities. This communication relates to a deemed to be participants in any solicitation of CP or NS shareholders proposed business combination between CP and NS. in connection with the proposed transaction. Information about CP’s executive officers and directors is available in CP’s Annual Report on Subject to future developments, additional documents regarding the Form 40-F for the year ended December 31, 2014, which was filed proposed transaction may be filed with the SEC. Investors and security with the SEC on February 23, 2015. Additional information about the holders are urged to read such disclosure documents regarding the interests of potential participants will be included in any proxy proposed transaction, if and when they become available, because they statement filed in connection with the proposed transaction. will contain important information. Investors and security holders may obtain a free copy of the disclosure documents (when they are available) and other documents filed by CP with the SEC at the SEC’s website at www.sec.gov. The disclosure documents and these other documents may also be obtained for free from CP at http://www.cpr.ca/en/investors or by directing a request to Canadian Pacific Railway Limited, 7550 Ogden Dale Road S.E., Calgary, Alberta, Canada, T2C 4X9, Attention: Office of the Corporate Secretary. 3

SUBSTANTIAL VALUE CREATION Fuel PRE-MERGER OPERATIONAL IMPROVEMENTS (72%) Support $100M Commencing upon trust approval: functions $270M  Fuel efficiency improvement Train productivity  Velocity improvement $230M  Improved asset utilization  Yard and terminal optimization  Workforce management (leveraging attrition) Revenue  War on bureaucracy $225M US$1.8B POST-MERGER COMBINATION SYNERGIES (28%) Commencing upon final STB approval:  Extended reach and longer length of haul  Market share gains with improved service  Interline efficiencies Workforce Locomotive productivity $550M productivity $380M ADDITIONAL SOURCES OF VALUE CREATION  Effective tax rate below 30%  Cash tax savings of ~$200M annually  Asset monetization opportunities  Real estate monetization 6

A COMPELLING OFFER STB No STB Merger Merger Approval Approval $140 NSC standalone $125 Cash component Stock component $91 $79 $107 $92 NS plan 1 Unaffected before offer Share price share price $33 $33 $79.14 $90.50 $204.00 $237.00 NS Standalone Projected CP-NS 2 Value Share price $79 $91 $204 3 $237 4 Synergies (US$bn) 0.0 0.0 1.3 1.8 Implied 2017E P/E multiple 12.2x 13.8x 16.6x 19.3x Effective premium 5 - 14% 58% 77% Note: Please refer to the December 8, 2015 presentation on www.cpr.ca for detailed modeling assumptions. 1 Share price reflecting 65% operating ratio target per 12/04/2015 NS investor presentation; 2 Assumes the Pre-Merger Operational Improvements of US$1,260mm phased in at 17%, 42%, 67%, 92% and 100% in ’16, ’17, ’18, ’19 and ’20 respectively based on May 1, 2016 trust entry with the additional Post-Merger Combination Synergies of US$495mm having the same 4-year phase-in post-close; 3 Represents illustrative value of CP-NS based on 2021E EPS discounted to close into trust at 05/01/2016 by cost of equity if no STB approval; 4 Represents illustrative value of CP-NS based on 2021E EPS discounted to close into trust at 05/01/2016 by cost of equity if STB approval received; 5 Represents premium to unaffected 45-day VWAP of $79.14

ENHANCING THE VALUE WITH A CVR Previous Offer Current Offer • US$32.86 in cash in May 2016 • US$32.86 in cash in May 2016 • 0.451 shares in new company • 0.451 shares in new company • 0.451 of a Contingent Value Right (CVR)  A CVR is a highly liquid instrument which gives holders an ability to convert to cash at their discretion  Provides up to $3.4 billion of increased value to NS shareholders 8

HOW A CVR ENHANCES THE OFFER $141 NSC standalone $128 Cash component $1 $116 Stock component $3 $108 1 CVR value $5 $7 $91 $79 $107 $92 $79 $68 NS Unaffected plan 2 share before offer Share price price $33 $33 $33 $33 $79.14 $90.50 $150.00 $175.00 $204.00 $237.00 NS Standalone CVR Protection Projected CP-NS 3 Value ` Share price $79 $91 $150 $175 $204 4 $237 5 Synergies (US$bn) 0.0 0.0 0.5 0.5 1.3 1.8 Implied 2017E P/E multiple 12.2x 13.8x 12.4x 14.2x 16.6x 19.3x Effective premium 6 - 14% 36% 47% 61% 78% 1 Based on potential CVR trading values; Assumes 25% volatility; 2 Share price reflecting 65% operating ratio target per 12/04/2015 NS investor presentation; 3 Assumes 4-year Pre-merger Operational Improvements of US$1,260mm phased in 17%, 42%, 67%, 92% and 100% in ’16, ’17, ’18, ’19 and ’20 respectively based on May 1, 2016 trust entry with the additional Post-Merger Combination Synergies of US$495mm having the same 4-year phase-in post-close; 4 Represents illustrative value of CP-NS per share based on 2021E EPS discounted to close into trust at 05/01/2016 by cost of equity if no STB approval; 5 Represents illustrative value of CP-NS per share based on 2021E EPS discounted to close into trust at 05/01/2016 by cost of equity if STB approval; 6 Represents premium to unaffected 45-day VWAP of $79.14