Activist investor plans to call for meeting to remake CN board

LONDON — Activist investor TCI Fund Management says it will call for a special meeting of Canadian National shareholders to nominate at least five new members of the board of directors, and has hired shareholder advisory and communications firm Kingsdale Advisors to help halt CN’s pursuit of Kansas City Southern.

Chris Hohn, TCI founder and portfolio manager, said in a press release that CN’s “copycat” bid for KCS, along with “CN’s continued operational under performance, manes the case for change compelling and clear.

“It is shocking to us that there is currently no one on the board who has had any meaningful  outside involvement, background, or training in the railroad industry. The bid for KCS exposed a basic misunderstanding of the industry and the regulatory environment. The CN board must therefore take full responsibility for its egregious failure of oversight in sanctioning the bid.”

TCI said it had engaged Kingsdale to provide advice, assist in engaging shareholders, and lead TCI’s efforts in a proxy fight, if one develops. Kingsdale, the release notes, previously represented activist investor Bill Ackman in his successful bid to change the board at Canadian Pacific in 2012.

TCI said in a May letter that it would seek the removal of CN CEO JJ Ruest, along with board chairman Robert Pace, if the CN bid for KCS failed [see “Major CN investor urges railway to drop KCS bid …,” Trains News Wire, May 18, 2021.] It subsequently became the railroad’s second largest stockholder, and — after the Surface Transportation Board denied a voting trust during the CN-KCS merger process — called for the resignation of Ruest and Pace [see “Major CN investor calls for ouster of CEO …,” News Wire, Aug. 31, 2021].

In light of the STB’s ruling on the CN-KCS voting trust, the KCS board met Saturday and said it would once again enter merger discussions with Canadian Pacific, saying CP was in position to provide a “company superior proposal” [see “Kansas City Southern moves toward a merger agreement with Canadian Pacific,” News Wire, Sept. 4, 2021].