TORONTO (Reuters) - Shareholder activism is “long overdue” at some major U.S. railways, Canadian Pacific Railway Ltd Chief Executive Hunter Harrison said in an interview on Tuesday after several U.S. competitors reported disappointing financial results.
Asked whether activist shareholders might put pressure on some major U.S. railways to consider putting themselves on the auction block, Harrison, who was installed at CP Rail after a proxy campaign by Bill Ackman’s Pershing Square Capital management, said he could see that happening.
“I think you could. I think they’re long overdue,” he said. “Where have they been? Who’s the advocate for the shareholder? If I was the shareholder, I wouldn’t tolerate some of it.”
Harrison declined to name specific railways, saying “that would be mean”.
CP Rail discussed a merger with CSX Corp last year, but could not reach a deal.
In October, Harrison said he was open to a deal with one of the two major eastern U.S. carriers, clearly referring to CSX and Norfolk Southern Corp, though he did not name Norfolk Southern. But in March, he said he did not expect CP to be involved in any consolidation in the short term, because “nobody wants to do a deal”.
On Tuesday, Kansas City Southern reported a drop in revenue and earnings that were slightly below expectations. Last week, CSX and Norfolk Southern reported results that were hurt by lower freight volumes and the impact of a stronger U.S. dollar on some commodity imports.
CP Rail, by contrast, reported stronger-than-expected first quarter earnings as revenue rose and operating efficiency improved significantly.
On a conference call with analysts and investors on Tuesday, Harrison was asked repeatedly whether he was interested in pursuing a deal.
“I don’t mean to be short about this, but effectively, we have no interest,” he said.
He declined to say on the conference call what had prompted CP to drop its interest.
Reporting by Allison Martell; Editing by Peter Galloway