Ackman’s Pershing Square exits CP stake

Investment fund Pershing Square Capital Management, run by billionaire activist investor Bill Ackman, will sell its 9.8 million shares in Canadian Pacific Railway Ltd., the two companies said in separate statements.    Billionaire activist investor Bill Ackman’s Pershing Square Capital Management L.P. is selling its stake in Canadian Pacific Railway Ltd. (CP), the two companies said in separate statements.
   The investment fund commenced a public offering of its 9.8 million CP shares on Wednesday with JPMorgan Chase, Credit Suisse and Bank of America Merrill Lynch acting as underwriters. The total stake is worth $1.44 billion based on Tuesday’s closing price of $146.71 per share.
   Shares fell as low as $141.89 on Thursday, but rebounded on Friday to $144.37 at the time of writing.
   Ackman, who won a proxy fight to install new leadership at the Calgary-based Class I railroad following Pershing Square’s acquisition of a 14.2 percent stake in 2012, said he intends to continue to serve on the CP board of directors until the next annual meeting. The investment group intends to use proceeds from the sale to fund one or more new investments.
   “Canadian Pacific has completed an incredible transformation since our initial investment in 2011,” he added. “Hunter Harrison and Keith Creel have restored to greatness one of North America’s top railroads and have set the company on the path to continued success.”
   Following the proxy fight, Ackman replaced then-chief executive officer Fred Green with Harrison, the former president and CEO of CP competitor Canadian National, blaming Green and the board for the company’s poor performance and sagging profits. Harrison then brought on his protégé and former executive vice president and chief operating officer at CN, Keith Creel, to serve as president and COO.
   CP announced last month it had reached an agreement with Creel to serve as its next CEO following Harrison’s retirement on July 1, 2017. The railway also reported a 16 percent year-over-year decline in net earnings to $328 million Canadian (U.S. $251.5 million) for the second quarter of 2016.
   In April, CP abandoned its months-long attempt to acquire number four U.S. railroad Norfolk Southern Corp. (NS) after the nearly $30 billion offer was rebuffed several times by NS and met with strong opposition from other Class I freight railroads, high volume shippers and U.S. regulatory bodies.