Activist investor Elliott Management Corp. has a big stake in Canadian National Railway Co. CNI 5.23% , people familiar with the matter said, adding to pressure on the railroad after its CEO resigned following a failed bid for rival Kansas City Southern.
Canadian National, facing a proxy fight from another activist, TCI Fund Management Ltd., said Tuesday Chief Executive Jean-Jacques Ruest is stepping down. TCI is seeking four board seats in a vote set to take place early next year.
TCI, which has a more than 5% stake and opposed the Kansas City Southern bid, has named Jim Vena, a former executive of railroad giant Union Pacific Corp. , as its choice for CEO. Elliott also supports Mr. Vena, who is being considered by Canadian National’s board, the people said.
Elliott, whose stake is smaller than TCI’s but still substantial, has been in talks with Canadian National for weeks, they said. Details of the discussions couldn’t be learned.
The drama at Canadian National, which has a market value of more than $90 billion, began when it made a topping bid for Kansas City Southern after Canadian Pacific Railway Ltd. had already clinched a $25 billion deal for the railroad. That prompted Kansas City Southern to switch partners, before a regulatory panel that must bless railroad mergers denied Canadian National’s plans to use a temporary voting trust, a key element of its proposal.
In the wake of that decision, Kansas City Southern favored a sweetened cash-and-stock offer from Canadian Pacific, which had already received the go-ahead for a similar trust. Canadian National then stopped its pursuit, saying the U.S. regulatory landscape had become more challenging for major railroad mergers since its bid was launched.
Canadian National said Tuesday that Mr. Ruest would retire in early 2022 or at a later time if it takes longer for a successor to be appointed.
Canadian National shares rose on the news of Mr. Ruest’s departure, increasing 5.2% to $130.79 Wednesday in regular trading on the New York Stock Exchange before The Wall Street Journal reported on Elliott’s stake. They rose further after hours.
U.K.-based TCI on Tuesday said Mr. Ruest’s planned departure is “a clear admission by the board that change is needed” and urged the company to meet with Mr. Vena and its four director candidates.
Canadian National said its board is open-minded and will consider all qualified and interested candidates.
Mr. Vena previously worked at Canadian National for decades before working at Union Pacific.
Elliott, founded by billionaire Paul Singer, manages roughly $48 billion in assets and has been one of the most visible activist investors in recent years, agitating at companies including Duke Energy Corp. and Twitter Inc.
Write to Cara Lombardo at [email protected]
Corrections & Amplifications
Canadian National said Tuesday its CEO is stepping down. An earlier version of this article incorrectly said it was on Wednesday. (Corrected on Oct. 20, 2021)
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Appeared in the October 21, 2021, print edition as ‘Elliott Has Big Stake in Railroad.’
