Canadian National railway chief to step down amid pressure from Hohn’s TCI fund
Canadian Nationwide mentioned on Tuesday that its chief govt Jean-Jacques Ruest will depart the corporate as quickly as January, weeks after UK hedge fund supervisor Chris Hohn known as for his resignation.
The Montreal-based railway group mentioned Ruest’s departure was a deliberate retirement after simply over three years within the position. However his exit comes as CN has been battling to maintain buyers on facet and Ruest solely final month introduced a strategic plan known as “Full Velocity Forward”.
A marketing campaign led by Hohn’s TCI hedge fund has been constructing steadily over the previous 5 months wherein the UK billionaire has sought to oust Ruest in addition to a number of members of the corporate’s board.
“Nothing modifications. We press on to the shareholder vote,” Hohn instructed the Monetary Occasions after Ruest’s exit was introduced.
Hohn’s disapproval of CN administration stems from its failed attempt to purchase Kansas Metropolis Southern in a deal that may have turned the mixture into the third-largest railroad operator by income in North America.
CN gatecrashed an agreed takeover of KCS by its smaller rival Canadian Pacific with a $34bn deal, solely to be compelled to desert it after a US railroad regulator rejected the best way the transaction was structured. That paved the best way for CP to return and strike a $31bn deal to purchase KCS.
Robert Tempo, CN chair, mentioned in an announcement that Ruest had deferred discussions on his retirement to see by means of the potential cope with KCS. “We’re grateful for his management and his exemplary dedication of service to the corporate,” Tempo mentioned in a written assertion.
Hohn’s TCI, which owns a greater than 5 per cent stake in CN price about $4.3bn, had put stress on the corporate to drop its bid as early as Might. The London-based hedge fund warned that the deal confronted vital regulatory hurdles and a choice to create a voting belief “can be massively worth damaging”.
In an announcement launched on Tuesday, Hohn mentioned Ruest’s departure “is an efficient begin” however added that “it doesn’t tackle the elemental drawback of an absence of management, failed strategic oversight, and the vacuum of operational experience on the board stage”. The fund has additionally reiterated a name for Tempo’s resignation.
TCI added that it has already recognized an appropriate successor for Ruest, CN’s former chief working officer Jim Vena. The Canadian-born govt retired from his publish at CN in 2016 and later joined Union Pacific, the biggest listed US railroad firm, as chief working officer after which senior adviser.
The hedge fund additionally urged the railway group to fulfill its 4 board nominees, saying their enter within the seek for a brand new chief must be welcomed “given the historical past of failed CEO appointments”.