TCI’s railroading tactics

2 minute read

A Canadian National Railway (CN Rail) train moves through wooden pallets placed there by occupants of a Tyendinaga Mohawk Territory encampment set up in support of the Wet'suwet'en Nation who are trying to stop construction of British Columbia's Coastal GasLink pipeline, in Tyendinaga, Ontario, Canada February 26, 2020.

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NEW YORK, Jan 26 (Reuters Breakingviews) - There are two ways to win an activist battle: dominate or compromise. In the case of hedge fund TCI Management’s campaign against Canadian National Railway (CNR.TO), the resolution announced on Tuesday smacked of the latter. But the tactics made the battle feel more like the activist was gunning for the former.

The railroad company, which made a failed attempt to take over Kansas City Southern last year, named Tracy Robinson president and chief executive and said it would appoint two new independent directors. The CEO that the company chose was not the one that TCI had backed, and the fund run by Chris Hohn had wanted four new directors, not two.

Meeting in the middle is a typical outcome, but the scrap was ugly. CN accused Hohn’s fund of “empty posturing” while TCI as recently as December said the company’s CEO search process was a failure. Meantime former CEO Jean-Jacques Ruest read more didn’t go down easily.

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TCI, with 5% of CN, said it is looking forward to “constructive future engagement.” The real test is whether both parties can put egos aside to make that happen. (By Lauren Silva Laughlin)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Swaha Pattanaik and Sharon Lam

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