CP says the buyback will be made in accordance with an issuer bid exemption order issued Friday by the Ontario Securities Commission.
"The price CP will pay for the common shares purchased by way of the private agreements will be at a discount to the prevailing market price of CP common shares on the Toronto Stock Exchange at the time of purchase," CP said in a release after markets closed.
Under the order, the purchase can be made in several transactions prior to March 16, 2015.
The railway says the buyback of shares for cancellation will be counted towards CP's share purchase program announced earlier this month for up to 5,270,374 shares.
On the Toronto Stock Exchange, CP shares closed up 95 cents at $163.66 on Friday.