Saturday, May 19, 2012

Inside Bill Ackman's Overthrow of CP

As Mr. Ackman tells it, what happened next was a campaign to stall and deflect his demands. CP offered him a seat on the board, but rejected his long-time business partner, Paul Hilal, as a candidate. As for Mr. Harrison, he says, CP went radio silent for two months. They simply did not want to talk about him or even meet with him.
The moment Mr. Ackman put forward Mr. Harrison’s name proved to be a critical one; arguably, it was what pushed the two sides toward war.
According to people close to CP, the board was unanimously opposed to Mr. Harrison. The hard-driving cost cutter may have transformed CN into of North America’s top-performing railways, but his tactics had so alienated customers that it prompted the federal government to hold a public inquiry into customer complaints that proved to be embarrassing for both railways.
The harder Mr. Ackman pushed for the railway veteran, the deeper CP’s board dug in its heels, a rift that ultimately triggered a very public and angry exchange of accusations that culminated in Pershing Square launching a proxy battle to replace a minority of directors.
At the time, sources close to CP say, the board believed it would be able to convince its major shareholders that Mr. Ackman’s crusade for Mr. Harrison would be destructive for a railway that was just emerging from a dark tunnel with improved performance.

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