The Jacksonville, Fla.-based Class I railroad has entered into discussions with outgoing Canadian Pacific Railway chief executive officer E. Hunter Harrison, according to a report from the Wall Street Journal.
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CSX has entered into discussions with outgoing CP CEO E. Hunter Harrison about potentially installing him as its next CEO, according to a report from the Wall Street Journal.
CSX Corp. has entered into discussions with Canadian Pacific Railway’s outgoing chief executive officer, E. Hunter Harrison, about potentially installing him as its next CEO, according to a report from the Wall Street Journal.
According to WSJ, Harrison met with CSX officials on Friday to discuss his vision for the future of the company should he be selected to replace current CEO Michael Ward, who is scheduled to retire in 2019.
Earlier this month, CSX’s stock hit a 5-year high on speculation that Harrison may be eyeing the Jacksonville, Fla.-based Class I railroad as his next landing spot. The reports came as CP announced Harrison would retire effective immediately, nearly six months ahead of the previously announced schedule, causing him to forfeit benefits and equity awards totaling $118 million Canadian (U.S. $88.6 million).
Harrison’s early exit was reportedly all part of a larger plan to team up with activist investor Paul Hilal and pursue a leadership position with CSX. Anonymous sources familiar with the matter told WSJ and Reuters Hilal’s investment firm, Mantle Ridge LP, is following the blueprint Harrison and billionaire investor Bill Ackman set when taking over CP, namely acquiring a large stake in CSX in the hopes of installing Harrison as CEO.
Harrison is widely credited with turning CP from one of the worst performing Class I freight railroads in North America to one of the best since joining the company in 2012.
He has long been an advocate for consolidation in the North American railroad industry, and analysts have already begun to speculate as to his intentions with CSX. Under Harrison’s guidance, CP in late 2015 and early 2016 engaged in a highly public, albeit unsuccessful, takeover attempt of fourth-largest U.S. railroad Norfolk Southern.
With Harrison’s protege and current Chief Operating Officer Keith Creel taking the reigns at CP, some have posited that a merger between CP and CSX could be in cards should Harrison be installed at CSX.
Whether shareholders would vote Harrison into a leadership role, let alone vote in favor of a merger, is another question entirely. And any deal would still be subject to approval from the U.S. Surface Transportation Board and the relevant regulatory authorities in Canada.
Reached for comment, a spokesperson for CSX told American Shipper, “As we have said previously, CSX is committed to engaging with shareholders in constructive dialogue, hearing their input directly, and being open to sound, actionable ideas. The board will continue to represent the needs of all shareholders as it evaluates any ideas put forth as it pursues the long-term success of the company.”
CSX has until Feb. 10 to nominate directors for election at the company’s annual meeting, but sources say this deadline could be extended given the current circumstances.