TORONTO, May 22 (Reuters) - Canadian Pacific Railway will become a “more aggressive” buyer of short-line regional railroads as it improves its financial performance and operating efficiency, Canada’s second-largest railway said on Wednesday.
In a sign of where he plans to take the company after an aggressive program of cost cuts and service improvements, Chief Executive Hunter Harrison said CP will play a bigger role than in the past in the consolidation of the railway industry.
“It’d be hard for us to put together the wherewithal to be able to make an acquisition of a Class One (railroad), that’s just probably not in the cards for some time,” Harrison said in a webcast presentation at a transportation conference. Harrison was an active dealmaker when he ran rival Canadian National Railway from 2003 to 2009.
“We certainly will become, along the short-line regional front, more aggressive than we have been in the past.”
Harrison did not identify any targets, but said he did not agree with a recent report that CP or CN should buy Kansas City Southern Railway Co to gain access to the growing Mexican market, calling the idea a “worn out” story.
During Harrison’s tenure at CN, the company bought BC Rail, operating in British Columbia; the Bessemer and Lake Erie Railroad in Pennsylvania and Ohio; the Duluth, Missabe and Iron Range Railway in Minnesota and Wisconsin; and the principal lines of the Elgin, Joliet & Eastern Railway, running between Illinois and Indiana.
Shares of CP fell 21 Canadian cents to C$139.76 on the Toronto Stock Exchange on Wednesday. The company said earlier in the day it had repaired and reopened a rail line near Jansen, Saskatchewan, and continued a cleanup there after a derailment on Tuesday morning that spilled 575 barrels of crude oil.