A day after being turned down by Kansas City Southern, Canadian National Railroad is facing additional pressure from a major investor who wants CN to abandon its attempt to buy US Railroad.
OMAHA, Neb. — A day after being turned down by Kansas City Southern, Canadian National Railroad is facing added pressure from a major investor who wants CN to abandon its attempt to buy US Railroad.
London-based investment firm TCI Fund – which owns about 5% of CN’s stock and about 8% of rival Canadian Pacific’s shares – said on Monday it is calling for a special CN shareholder meeting where it will consider four new directors. planning to nominate TCI has said it thinks CN should change its board, get a new CEO, and refocus efforts to improve its own operations.
“History has shown that railroads can be improved rapidly with the right leadership. TCI’s independent and highly skilled nominees, if elected, will help lead and guide the selection of the new CEO,” said TCI Chris Hohn, Founder and Managing Partner of
TCI has said that Jim Venna, a former CN executive who also served as Union Pacific’s head of operations for several years, should be named CN’s next CEO.
Currently, CN is led by JJ Ruest, who has been President and Chief Executive since July 2018. Ruest has been with the railroad since 1996.
Canadian national officials did not immediately respond to TCI’s call for a special meeting on Monday, but the railroad said on Sunday that it would choose Canadian Pacific’s $31 billion offer over CN’s higher bid by Kansas City Southern. Evaluate all your strategic options.
Canadian National made a $33.6 billion bid to acquire Kansas City Southern, but regulators rejected a significant portion of its plan last month. Under the terms of the merger agreement with KCS, CN still has five business days to respond and possibly sweeten its offer.
But Canadian National’s bid became less attractive when the Surface Transportation Board said last month that it would not be able to use a voting trust to acquire Kansas City Southern and then hold Rail during the board’s lengthy review of the overall deal. , which may take 18 months or more.
Benchmark Research analyst Nathan Martin said in a note that he believes CN should refrain from bidding at this point, instead improving its service and growing its business systematically. He rates the stock as a “hold”.
Regulators have approved the use of Canadian Pacific’s Voting Trust as part of their plan to acquire Kansas City Southern because there are less competing concerns about the combination of Canadian Pacific and Kansas City Southern, and these two major railroads. are the smallest.