Analysis: Ackman scores early in Canadian Pacific fight

Tue Feb 7, 2012 7:56pm EST
 
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By Allison Martell

TORONTO (Reuters) - William Ackman has momentum working in his favor in his battle to shift the balance of power on Canadian Pacific Railway's board and install his hand-picked candidate as chief executive of North America's worst-in-class rail operator.

Ackman's Pershing Square Capital Management, which holds 14.2 percent of CP, may have the upper hand after a "town hall" meeting he hosted in Toronto on Monday, analysts and investors say.

The activist investor staged the event to formally introduce shareholders to Hunter Harrison, the man credited with turning around rival Canadian National Railway, and to sketch out his vision for a more efficient CP, the country's No. 2 railway.

Even though the session may have fallen short on specifics, Ackman appears to have cast his plan for CP in a favorable light, even as the company maintained that the current CEO, Fred Green, deserved more time to make progress.

"If I were a betting person, I would be betting on Pershing Square prevailing, based on what I'm hearing," said Canaccord Genuity analyst David Tyerman.

While cautioning that he is working from a small sample, Tyerman said he had spoken with a few large shareholders, and all said they would vote with Ackman, who argues that a new CEO could remedy CP's poor operating efficiency.

"COMPELLING CASE"

Todd Johnson, portfolio manager at BCV Asset Management, was convinced before Monday's meeting. BCV, which manages about C$330 million ($332 million) in total, holds about 87,000 CP shares for his clients, and has managed holdings in the company for more than five years.   Continued...