CPR chief pooh-poohs takeover rumors
(The following story by Brent Jang appeared on the Globe and Mail website on July 26.)
TORONTO — Canadian Pacific Railway Ltd.'s best defence against any potential hostile suitor will be maintaining a streak of higher profit and lower operating costs, says the company’s chief executive officer.
Fred Green, who took over the top job in April, said Tuesday that he’s aware of recurring rumours that Calgary-based CPR is a takeover target. Some CPR employees, anxious about takeover speculation, recently circulated internally by e-mail a portrait of a beaver, representing CPR, sitting on the blue-topped, red-striped logo of Union Pacific Corp. of Omaha.
Besides Union Pacific, Norfolk Southern Corp. of Norfolk, Va., is frequently mentioned as a possible bidder for CPR.
“The best thing we can do is to operate this railway as efficiently as we possibly can,” Mr. Green said in an interview after CPR announced that its second-quarter profit tripled to $377.5-million or $2.36 a share. That compares with $123.2-million or 77 cents a year earlier. Revenue climbed 2.3 per cent to $1.13-billion.
CPR shares rose $1.61, or 3 per cent, to $55.60 Tuesday on the Toronto Stock Exchange. More than 1.3 million shares traded hands, or double the average daily volume.
Mr. Green also said that even if an unwelcome bidder emerges, there are high obstacles to clear in the form of regulatory approvals required from the U.S. Surface Transportation Board (STB).
“I would just advise that people need to be aware that there are a set of regulatory requirements, introduced through the STB, that will not make consolidation a simple and easy undertaking. It doesn’t mean it can’t be done or won’t be done, but there are hurdles,” said Mr. Green, who replaced the retiring Robert Ritchie as CPR’s CEO.
The STB requires that any merging parties prove to shippers that a combined en