UPDATE 4-CP Rail touts buybacks, dividends with M&A in rear view mirror

Wed Apr 20, 2016 4:37pm EDT
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* To buy back up to 6.91 million shares, or 5 percent of float

* Raises dividend to C$0.50/share from C$0.35

* First-quarter earnings beat Wall Street estimate

* CEO plans to retire in 2017, hand over reins to COO (Adds CEO comments on co strategy, retirement, updates share price move)

By Allison Lampert and John Tilak

MONTREAL/TORONTO April 20 (Reuters) - Canadian Pacific Railway Ltd plans to pay out dividends and put its funds toward share buybacks rather than building a cash hoard after failing in a recent M&A quest, its chief executive said on Wednesday.

"We're not going to sit on cash unless we have an idea of what we're going to do with it," CEO Hunter Harrison told media after the company's annual meeting in Toronto. "If we see an opportunity that's realistic, that is maybe a year away and we think we can make it happen, then we might start being not so aggressive with dividends or buybacks and keep some of our powder dry."

The comments from the veteran railroader, who plans to hand over the reins at CP to his protégé Chief Operating Officer Keith Creel next June, come barely a week after CP abandoned its bid for U.S. rival Norfolk Southern Corp in the face of political and customer concerns.

Earlier on Wednesday, Canada's No. 2 railroad reported first-quarter results that topped expectations. It also outlined plans to buy back up to 5 percent of its shares and boost its dividend payout by 42 percent. Its shares fell slightly, however, as analysts noted that the size of the buyback was smaller than some investors may have anticipated.   Continued...