CALGARY, Alta. — In an announcement of historical significance, Canadian Pacific Ltd., whose national railway has connected Canada from coast to coast for over a century and whose shipping lines have helped make the country a major seafaring nation, is breaking up.

Chairman and CEO David O’Brien says the company intends to divide itself into five separate companies, all of which will be traded publicly. Under the proposed reorganization, to be implemented through a Plan of Arrangement, Canadian Pacific would distribute its approximately 86 percent investment in PanCanadian Petroleum and its 100 percent interest in each of Canadian Pacific Railway, CP Ships, and Fording to holders of Canadian Pacific’s common shares. After the distribution, Canadian Pacific Hotels would then be the only significant business of Canadian Pacific. O’Brien also announced that he plans to step down after the restructuring is completed in the fall.

The move hinges on receiving a favorable tax ruling from the federal government and approval from shareholders. CP’s plan calls for shareholders to receive stock in five separate companies.

“This reorganization is the right step to take for our shareholders, for these five exceptional companies, and for the wider investment community. It will better equip each business to pursue even greater success by providing them with direct access to public equity markets and shares that can be used as acquisition currency and incentive compensation. It will also allow the management of each company to evaluate its growth opportunities and organize its capital structure according to its own industry,” O’Brien said in a release. “As well, the investment community will be able to more easily follow and accurately value these industry leaders on a stand-alone basis against competitors, benchmarks and performance criteria specific to each business sector.”

Last month, CP Ltd. reported a $1.76 billion profit for 2000, a record high for the company.

The break up of CP also brings into question the possibility of CP Rail falling into foreign hands. It will now be up to shareholders and the federal government to decide whether an independent CP Rail or the other companies remain Canadian owned. There are currently no laws preventing the sale of CP Rail to a foreign company.

Few jobs are expected to be affected by the reorganization and it’s anticipated that the five operating companies, employing a total of about 50,000 people, will be essentially unchanged.

CP is one of Canada’s oldest companies, founded in 1881 to build a transcontinental railroad. CP, based in Calgary, owns Canadian Pacific Railway, CP Ships, PanCanadian Petroleum, Fording Coal and CP Hotels & Resorts.