05 Agustus 2016

[050816.EN.BIZ] Pershing Square's Bill Ackman Sells His Canadian Pacific Railway Stock

CONTROVERSIAL US investor Bill Ackman, who bought Canadian Pacific Railway (CP) shares in 2011, to unseat management and restore efficiency, is selling his stock though he is expected to remain on the board.

Calgary-based CP and Mr Ackman's Pershing Square Capital Management have announced the public offering of 9,840,890 of Canadian Pacific's common shares by certain funds managed by Pershing Square.

"Canadian Pacific is not selling any common shares in the offering and will not receive any of the proceeds from the offering of common shares by the funds managed by Pershing Square," said the CP statement.

At the time, few shareholder campaigns had ever challenged a company as prominent as Canadian Pacific - once Canada's biggest company - and Mr Ackman was in the press for his successful rescue of General Growth Properties GGP -0.42 per cent, but also his calamitous misfire on retailer Target TGT +0.28 per cent.

Within a year's time, he won a shareholder proxy campaign and installed Hunter Harrison, a veteran of the railway industry who had revived Canadian National (CN), CP's chief rival and until privatisation, was the smaller of the two.

CN was government-owned, having been a Canadian Crown corporation from its founding to its privatisation in 1995. Bill Gates was, in 2011, the largest single shareholder of CN stock.

As CEO, Mr Harrison's CP profits nearly tripled from the end of 2012 to the end of 2015. For Pershing Square, CP has been one of the fund's biggest-ever winners, generating US$2.6 billion in total gains, or an almost fourfold gain.

Mr Ackman will remain on Canadian Pacific's board, but he will no longer be an investor. Pershing Square's stock sale comes amid declining rail volumes in North America, mostly due to a plunge in oil and gas prices and a slowdown in demand for hard commodities like coking coal, iron ore and steel.

Faced with a weak economic backdrop, Canadian Pacific launched a hostile bid to buy Norfolk Southern, in an effort to bring its cost discipline to one of America's largest railways. However, the hostile bid failed amid a backlash from regulators and customers.

Source : HKSG.

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