Ackman wants ex-CN CEO to run Canadian Pacific: source
By Paritosh Bansal and Allison Martell
NEW YORK/TORONTO (Reuters) - Activist investor Bill Ackman wants Hunter Harrison, the retired chief executive of Canadian National Railway, to help engineer a turnaround at Canadian Pacific Railway, a source familiar with the situation said on Friday.
Ackman, whose hedge fund, Pershing Square Capital, has built up a 14.2 percent stake in CP, has suggested to the company's board that Harrison should replace CEO Fred Green, the source said.
CP's shares were up 3.6 percent at C$68.88 in Friday afternoon trading on the Toronto Stock Exchange.
Both CP, Canada's No. 2 railway, and Pershing Square declined to comment.
Ackman's move draws on a strategy he used earlier at J.C. Penney Co Inc. Unhappy with the U.S. retailer's performance and management, the hedge fund manager pushed for bringing in former Apple Inc executive Ron Johnson as CEO. Johnson took over as Penney's CEO on November 1.
Pershing Square has raised questions about CP's poor operating performance and about its management, although earlier this month it said discussions with the Canadian railroad had been productive.
CP, which operates a 14,000-mile rail network across Canada and into the United States, was hurt by heavy snow last winter and flooding over the summer. The company has the weakest operating results among North American Class 1 railways.
In the third quarter its operating ratio, an important measure of a railway's productivity, was 75.8 percent. By comparison, the larger CN reported an operating ratio of 59.3 percent. The higher the ratio, which measures operating costs as a percentage of revenue, the less efficient the railway. Continued...