Case study

Perishing Square /Bill Ackman and CP Rail / Shareholder Activism

Fact

Pershing Square, an activist hedge fund based in New York which is owned and managed by William Ackman, began hostile manoeuvres against the board of CP Rail

.

Consider the following points:

Governance at CP Rail

Valuation (premium offered or implied share price paid/ dilution of shares)

Market reaction

Strategic rationale (equity research or industry experts)

Negotiation and transaction process with big pension plan and small shareholders

Your candidates for the board

post transaction governance profile

Remember, Perishing Square must meet the burden of proving that CP Board of Directors change is warranted and how will the candidates proposed by Perishing Square be more likely to affect positive change (i.e. increase shareholder value] versus the current CP Rail.

Source Documents:

Canadian Pacific Railway Limited Notice of annual meeting of shareholders and management proxy circular published on March 22, 2012 (SEDAR.com)

Austem, I. "Canadian Pacific Rail way clashes with Ackman". The New York Times, January 3, 2012

Bradley, DE. "Bill Ackman on seeking a new CEO at Canadian Pacific". Bloomberg BusinessWeek, April 26, 2012

Deveau, S "CP Chief Fred Greene defends his track record" Financial Post, March 27, 2012

Deveau, S. "Corporate culture shift underway in Canada after CP Rail proxy fight". The Financial Post, May 11, 2012

The Board Games, the Globe and Mail's annual review of corporate governance practices in Canada (see class PowerPoint)