Billionaire investor William Ackman acquired a stake in Canadian Pacific Railway Ltd. CP 1.09% as the railroad seeks regulatory approval for its proposed $27 billion merger with Kansas City Southern.
Mr. Ackman’s hedge fund Pershing Square Capital Management disclosed in a regulatory filing that it owned roughly 2.8 million shares of Canadian Pacific as of Dec. 31.
The fund actually had exposure to many times that—about 14.8 million shares as of Monday, according to a person familiar with the matter. That figure would make Mr. Ackman one of the railway’s top 15 holders with a stake worth well over $1 billion based on the current share price.
It is the second time in the past decade that Mr. Ackman has invested in the company, which runs a rail network across Canada and parts of the U.S. In 2012, he successfully waged a proxy fight to shake up the board and install a new chief executive officer. He exited his position in 2016.
Canadian Pacific shares rose about 3% Monday morning to around $80 in New York Stock Exchange trading. The stock has gained about 13% so far this year.
Mr. Ackman, who has strayed from his typical activist investing in recent years, suggested in a statement that the investment was friendly. He said one of Pershing Square’s greatest regrets was selling its Canadian Pacific shares years ago, and that Canadian Pacific CEO Keith Creel has done a superb job since.
“We are delighted to again be an owner of this remarkable and growing franchise at a time when transcontinental rail infrastructure could not be more important for our economy and our continent,” he said.
A spokesman for Canadian Pacific declined to comment.
During Pershing’s earlier investment in the railway, Mr. Ackman backed veteran rail executive Hunter Harrison and later his longtime lieutenant Mr. Creel to successfully turn around the underperforming railroad.
Mr. Harrison, who went on to become CEO of CSX Corp. , died in 2017. Mr. Creel has been Canadian Pacific’s CEO since 2017.
The planned merger of Canadian Pacific and Kansas City Southern, which followed a bidding war with larger rival Canadian National Railway Co. , would create the first freight rail network linking Canada, the U.S. and Mexico. It is subject to approval by the U.S. Surface Transportation Board, which requires major railroad combinations to be in the public interest and enhance competition. Canadian Pacific expects the review to be completed by the end of 2022. The proposed combination received approval from Mexico in November.
The planned merger of Canadian Pacific and Kansas City Southern would create the first freight rail network linking Canada, the U.S. and Mexico.
Photo: Alex Ramadan/Bloomberg News
—Cara Lombardo contributed to this article.
Write to Jacquie McNish at [email protected]
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