Saturday, November 26, 2011


The fight for control of Canadian Pacific Railway

By Jacquie McNish and Brent Jang
The Globe and Mail

When he flew to Montreal three weeks ago to meet with senior officials of Canadian Pacific Railway Ltd., Bill Ackman came bearing a thick, limited-edition book.

The weighty volume is Mr. Ackman’s signature opening move. Ever since the New York-based shareholder activist founded Pershing Square Capital Management LP in 2003, nearly two dozen undervalued companies, including Wendy’s International Inc., Target Corp. and J.C. Penney Co. Inc. have received an Ackman book. The confidential studies, often the product of months of work by Pershing Square’s analysts and consultants, are detailed blueprints for boosting long-term profits at companies in his crosshairs.

CP shareholders can expect to learn within the next several weeks whether Mr. Ackman’s book will be embraced by the company as a road map to recovery or a declaration of war ... {Major snip ... }

In a quarterly letter to Pershing Square investors released this week, Mr. Ackman identified new management as one of his core strategies for “increasing long-term intrinsic value” at target companies. In his effusive account of the turnaround at J.C. Penney, Pershing Square’s largest investment, he trumpeted his recent recruitment of Ron Johnson, former retail chief of Apple Inc., to lead J.C. Penney’s recovery.

“I expect to look back on the decision by the company to hire Ron, and our role in identifying and recruiting him, as one of the most significant contributions that we have ever made to any company,” Mr. Ackman wrote.

He did not directly discuss management in the letter’s short four-sentence summary of the CP investment. But he left little doubt that the railway’s executive suite is a concern when he wrote that the railway’s poor performance “is generally not attributable to structural factors

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This is the offer that CP can't refuse.

When it gets into the public like this, it's already a done deal.

Deep integration, anyone?
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