John D. Boyd, Associate Editor | Nov 04, 2011 11:18AM EDT
Activist hedge fund investor William Ackman’s plan for boosting the value of his stake in Canadian Pacific Railway does not include selling off the second-largest carrier in Canada, Ackman told Bloomberg News.
Ackman’s Pershing Square Capital Management fund disclosed that it has acquired 12.2 percent of CP shares, triggering speculation that CP could undergo a major reorganization or even be sold. That made Pershing the largest CP shareholder.
In an interview, Ackman would not tell Bloomberg his strategy for increasing CP’s value, but said “we don’t think the company should be sold.”
Pershing’s move into CP follows a series of investments in railroads in recent years, including a stake in CSX Transportation by The Childrens’ Investment Management fund. TCI launched a hard-fought and successful 2008 proxy battle to install some of its chosen representatives on the board, before the 2008 financial collapse led TCI to shed its CSX holdings.
In November 2009, Warren Buffett’s Berkshire Hathaway, after years of building up its holdings in several large rail lines including BNSF Railway, announced it was buying the rest of BNSF in a deal that closed early in 2010. Berkshire also sold its shares in other carriers.
Speculation soon spread that CP could be matched up with Berkshire to create a North American super railroad covering much of both the U.S. and Canada, or that CP could team up with the north-south rail network of Kansas City Southern.
-- Contact John D. Boyd at jboyd@joc.com. Follow him on Twitter www.twitter.com/jboydjoc
