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Ackman Says He’s Not Pressing for Sale of Canadian Pacific

William Ackman said he isn’t pushing for a sale of Canadian Pacific Railway Ltd. (CP) after his activist hedge fund Pershing Square Capital Management LP became the carrier’s biggest shareholder.

“We don’t think the company should be sold,” Ackman said yesterday in a telephone interview, while declining to lay out his strategy for the Calgary-based railroad.

Ackman’s comment gave the first insight into his thinking following New York-based Pershing’s Oct. 28 disclosure that it held a 12.2 percent stake in Canadian Pacific and would seek talks with management. While his history of prodding companies to boost returns spurred speculation that he might seek a sale, he said that isn’t his aim at Canada’s second-largest railroad.

“This is not a case where we’re pushing to sell the company,” he said. “We don’t think that’s a good way to optimize the outcome for shareholders.”

Ackman, 45, invests in companies he deems undervalued. In the past year, Pershing Square has bought stakes of more than 10 percent in Fortune Brands Inc., the maker of Jim Beam bourbon now known as Beam Inc. after a spinoff, and J.C. Penney Co., the third-largest U.S. department store chain.

‘Work to Do’

“If I were Ackman, I would say the same thing,” Charles Clowdis, managing director of transportation advisory services at forecaster IHS Global Insight, said today in an e-mail. “He still has work to do to make CP a really good, solid investment.”

Canadian Pacific is “open to the views of its shareholders,” the carrier told employees in a memo over the weekend. “We will speak with Pershing Square to hear their input into our plan, already targeted at realizing greater efficiency and improved service reliability.”

Ed Greenberg, a Canadian Pacific spokesman, declined to comment today. He has said the railroad isn’t publicly discussing Ackman’s investment.

Canadian Pacific gained 0.2 percent to C$62.37 in Toronto. The railroad’s U.S. shares jumped in late trading on Oct. 28 after Pershing Square’s filing, then fell the past two days as most U.S. and Canadian equities slumped.

Pershing Square began building the stake in September, according to last week’s filing. The holding consisted of 20,659,504 common shares, including 2.65 million common shares through call options, the filing showed.

Sale Speculation

With Ackman silent earlier this week on his plans, analysts such as Peter Nesvold at Jefferies & Co. and RBC Capital Markets’ Walter Spracklin suggested that he might seek to force a sale, because Canadian Pacific has lagged behind its North American peers this year.

The U.S. shares fell 4.5 percent through Oct. 27, the day before Pershing Square’s stake was disclosed. Canadian National Railway Co. (CNR), the country’s largest railroad, climbed 20 percent in the same period, and all three carriers in the Standard & Poor’s 500 Railroads Index rose.

“Ackman has three things he can do -- fix it and run it himself, fix it a bit and attract a buyer like BNSF, or push them into a joint venture with someone like Kansas City Southern,” Clowdis, who is based in Lexington, Massachusetts, said in a voice-mail response to questions. “Taking the approach that we’re going to fix the railroad by improving service, raising prices, investing in new equipment, attracting more intermodal, will take some time.”

In an Oct. 31 note, Nesvold cited Kansas City Southern (KSU) as a possible venture partner for Canadian Pacific because their networks would complement each other. Kansas City, Missouri- based Kansas City Southern operates in the central U.S. and Mexico.

Burlington Northern Santa Fe is owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), which like Kansas City Southern hasn’t responded to messages left for comment about Canadian Pacific.

To contact the reporter on this story: Natalie Doss in New York at

To contact the editor responsible for this story: Ed Dufner at

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