Canadian Pacific turns down private equity takeover
Canadian Pacific Railroad said late Wednesday that it has rejected a buyout offer from Toronto-based Brookfield Asset Management Inc.
Canadian Pacific is one of six major railroads serving Canada and the United States. Speculation has circled this year that private equity interests were interested in making an offer for a Class I freight railroad as rail carriers enjoy record profits and volumes, and their franchises increase in value with the growth of international trade and bulk commodity shipments. Major investors such as Warren Buffet have recently bought large amounts of shares in several publicly traded railroads.
The Canadian Pacific said Brookfield’s offer, which was first reported by the Toronto Globe and Mail, was “highly conditional” and sought “exclusive negotiations and due diligence.”
The CP board “considered the inquiry to be inadequate after due deliberation and declined to enter into discussions,” it said in a statement.
Earlier in the day the Toronto Stock Exchange stopped trading on CP after shares jumped more than 20 percent on the Globe and Mail report. CP issued the statement at the behest of the Toronto Stock Exchange to address the takeover rumors.
Trading subsequently subsided, but company shares were still up 13 percent to about $84 near the closing bell.
The Toronto newspaper cited sources that said Brookfield was partnered with Goldman Sachs Group and pension fund manager Caisse de Depot et Placement du Quebec.
“While CP continues to receive such inquiries, it is not at this time in negotiations with any party with respect to a business combination. No assurance can be given that such negotiations might be entered into or that, if entered into, any transaction would result,” the railroad said, leaving the door open to renewed offers from Brookfield or other parties.