OMAHA, Neb. _ The executive who orchestrated the financial turnaround of Canadian Pacific railroad over the past five years is teaming up with an activist investor to target CSX railroad.
Shares of CSX, based in Jacksonville, Florida, jumped 17 per cent in early trading Thursday.
Hunter Harrison announced his retirement from CP Wednesday, and then told the Wall Street Journal about his plans. Harrison is reportedly working with investor Paul Hilal, who left Pershing Square last year to start his own hedge fund, which the paper reported has raised more than $1 billion for a single investment.
Harrison, 72, came out of retirement in 2012 to lead Canadian Pacific after Pershing Square Capital took a large stake in the railroad and forced management changes.
A year ago, Harrison led a failed Canadian Pacific bid to acquire Norfolk Southern railroad. Canadian Pacific abandoned its roughly $30 billion bid for Norfolk Southern after encountering opposition from the railroad, politicians and some customers.
Harrison had also contacted CSX at least twice since 2014 to explore the possibility of a merger with Canadian Pacific, but those talks never advanced.
A CSX spokeswoman didn’t immediately respond Thursday to questions about Harrison.
Citi research analyst Christian Wetherbee said Harrison’s new approach to CSX could be much less contentious that the Norfolk Southern merger bid and offer significant upside potential.
Harrison has a track record of cutting expenses significantly and imposing a scheduled operating model at the railroads he leads. Harrison also previously led Canadian National and Illinois Central railroads.
At Canadian Pacific, the railroad cut more than 6,000 positions and reduced the size of its locomotive fleet 40 per cent by running trains on schedule.
Since 2011, the average speed of Canadian Pacific’s trains improved 40 per cent to 23.5 mph, and its earnings per share more than doubled from 2012 to 2016 to $10.63 in Canadian dollars.