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Canadian Pacific assumes operational control of DM&E Railroad 

October 30, 2008  |  Calgary, Alberta 

Canadian Pacific Railway Limited (TSX/NYSE: CP) today celebrated the first day of operational control of recently acquired Dakota, Minnesota & Eastern Railroad Corporation and its subsidiaries: Iowa, Chicago & Eastern Railroad and Cedar American Rail Holdings.

"This is a significant day for Canadian Pacific, DM&E, IC&E and Cedar American Rail Holdings as it marks our acquisition of the largest and one of the most successful regional railroads in North America," said CP President and Chief Executive Officer Fred Green.  "We acquired the DM&E and IC&E railroads because of the opportunity for sustained double-digit top-line and EBITDA growth.  Given the year-to-date performance, and our current outlook, we are anticipating that it will surpass our estimate of $0.15 to $0.17 contribution to our 2008 earnings per share."

"The DM&E's speed to market, operational efficiency and organic growth reinforces our confidence in the strength and potency of this acquisition," added Green.  "The two networks belong together, the union of which will open up enhanced opportunities for shippers."

U.S. Senator John Thune noted: "The additional markets that will be available to rail shippers through Canadian Pacific's extensive rail network will create jobs, increase the market for South Dakota agricultural goods and value-added products, and improve our capability to transport products produced in South Dakota."

"It's clear that South Dakota and the entire upper great plains are in need of increased shipping infrastructure, and rail can be a cost effective and efficient means to ship a range of agricultural products," said South Dakota Congresswoman Stephanie Herseth Sandlin.  "I look forward to working with Canadian Pacific to encourage expanded rail capacity in our state and provide increased shipping alternatives for our producers."

"We truly appreciate the relationship we've had with the DM&E and look forward to a great relationship with Canadian Pacific," said Southern Grainbelt Shippers Association Secretary-Treasurer Randy Rieke from Hanska, MN.  "We see the expanded reach offered through CP into markets we rely upon as a big plus for our shippers."

South Dakota Wheat Growers CEO, Dale Locken, added further:  "We look forward to extended access to directly-served CP markets in Canada and the Eastern U.S. The single line haul opportunities will increase fluidity and enhance rail service."

"With the acquisition complete, we look to start building on the improvements the DM&E has already made in operating efficiency and safety," said CP Executive Vice President and CFO Kathryn McQuade.  "Over the next three years we will invest US$300M into the DM&E and IC&E networks.  This capital investment reinforces our commitment to safe and fluid operations for our shareholders, our employees, our customers and the communities we serve."

"Our state and region will greatly benefit from an additional Class I Railroad. South Dakota's rural economy relies on the availability of rail service to carry manufactured products and agricultural goods to market," Senator Thune continued.  "I applaud the DM&E and IC&E railroads for their hard work over the years in establishing a very successful regional railroad, and look forward to building a relationship with Canadian Pacific who, throughout the acquisition process, has shown a strong commitment to the people of South Dakota and our region."

"Our City and the DM&E have enjoyed a great relationship over the years," said Huron, SD Mayor David McGirr.  "And, we've been impressed with Canadian Pacific's efforts to work with us over the last year.  We were especially pleased to learn of their plans to invest heavily in track improvement.  That kind of a commitment to our transportation infrastructure is critical to our region's economic vitality."

The DM&E is the largest regional railroad in the U.S. and the only Class II railroad that connects and interchanges traffic with all seven Class I railroads, connecting with Canadian Pacific at Minneapolis, Winona, MN and Chicago.  It is headquartered in Sioux Falls, SD and has approximately 1,100 employees, 2,500 miles of track, including approximately 500 miles of trackage rights, and rolling stock that includes 7,200 rail cars and 150 locomotives.  The DM&E serves eight states: Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Wisconsin and Wyoming with access to Chicago, Minneapolis/St. Paul, Kansas City and key ports.

The STB first announced its decision on September 30, 2008.  Regulations stipulated a 30-day administrative period whereby registered participants could file final requests for information, clarification or conditions. The STB today confirmed its decision and the acquisition process is complete.

About Canadian Pacific

Canadian Pacific, through the ingenuity of its employees located across Canada and in the United States, remains committed to being the safest, most fluid railway in North America.  Our people are the key to delivering innovative transportation solutions to our customers and to ensuring the safe operation of our trains through the more than 900 communities where we operate.  Come and visit us at www.cpr.ca to see how we can put our ingenuity to work for you.  Canadian Pacific is proud to be the official rail freight services provider for the Vancouver 2010 Olympic and Paralympic Winter Games.

Note on forward-looking information

This news release contains certain forward-looking statements relating but not limited to the proposed acquisition transaction, anticipated financial performance and business prospects.  Undue reliance should not be placed on forward-looking information as actual results may differ materially.

By its nature, Canadian Pacific's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general North American and global economic and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of litigation; labour disputes; risks and liabilities arising from derailments; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions on the financial position of pension plans and investments, and various events that could disrupt operations, including severe weather conditions, security threats and governmental response to them, and technological changes.

There are factors that could cause actual results to differ from those described in the forward-looking statements contained in this news release.  These more specific factors are identified and discussed in the Outlook section and elsewhere in this news release with the particular forward-looking statement in question.

Except as required by law, Canadian Pacific undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.

Editors note: download a photo of Fred Green, President and CEO Canadian Pacific at the acquisition ceremony in Sioux Falls, SD

Contacts:

Media                                                  Investment Community
Mike LoVecchio                                    Janet Weiss
Tel.: (778) 772-9636                             Tel.: (403) 319-3591
email: mike_lovecchio@cpr.ca               email: investor@cpr.ca

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