Stock Jumps On Takeover Reports
THE rumor mill says Canadian Pacific - one of Canada's largest and oldest companies - is up for sale. The stock market believes some of it, because the share price is up 25 percent in the past several weeks. ``We don't comment on rumors,'' says Graeme McMurray at Canadian Pacific headquarters in Montreal. He would not comment that Canadian Pacific has hired a Wall Street law firm to fight off possible corporate raiders, such as Carl Icahn and T. Boone Pickens.
``It would be the ideal leveraged buyout candidate,'' says a Toronto broker. ``Its pieces are worth more than the whole, and a lot of the company is easily broken up.''
Any foreign buyer of Canadian Pacific would meet with political opposition, in spite of relaxed Canadian rules on foreign investment. ``If anybody should be buying out Canadian Pacific, it should be Canadian National,'' the government-owned railway, said Iain Angus, member of Parliament for the left-leaning New Democratic Party.
So far, no new person or company has amassed more than 5 percent of the stock. The two largest shareholders of Canadian Pacific are the Caisse de Depot, a Quebec-based pension fund, and Royal Trust, Canada's largest trust company.
Canadian Pacific Ltd. started life more than 100 years ago as Canada's first transcontinental railway. Last year it had profits of $820 million (Canadian: US$697 million) on revenues of $12 billion (US$$10.2 billion). It is so diversified it is said to be a microcosm of the Canadian economy.
Most everything Canadian Pacific owns can be traced to its roots as Canada's first transcontinental railway. It divides its holdings into five areas.
Transportation, waste services:
CP Rail. A 14,417-mile railway that had profits of C$181.2 million last year.
Soo Line. A 5,807-mile railway operating in the United States in which CP has a 55.8 percent stake.
CP Ships. Once a major operator of ocean liners and a fleet of cargo ships, it is now a smaller operation.
CP Trucks. This division lost C$1 million last year.
Laidlaw Transportation. Canadian Pacific owns 47.2 percent of the voting stock in this transportation and waste management firm.
PanCanadian Petroleum. The company owns 87.1 percent of the oil and gas company operating mainly in western Canada. Many of Canadian Pacific's original oil and gas finds came on railway rights of way it was given more than 100 years ago when it built the transcontinental railway.
Fording Coal. A coal mining subsidiary in western Canada.
Canadian Pacific Forest Products. Its timber rights in Ontario alone cover more area than Portugal. One of the largest pulp and paper producers in the world, the company is 80 percent owned by Canadian Pacific.
Real Estate and Hotels:
Marathon Realty is the commercial real estate arm of Canadian Pacific. It owns and operates 31 office buildings in Canada and four in the US, and has interests in 19 shopping centers in Canada and 11 in the US along with other holdings. Some of these properties are for sale.
CP Hotels operates 25 hotels in Canada and West Germany. It owns 15, leases three, and operates seven others. It is getting rid of its two hotel leases in West Germany. Last year it bought nine Canadian hotels from CN Hotels.
Telecommunications and Manufacturing:
CP Telecommunications. The old telegraph and telex company has lost ground to the telephone and the fax, and loses money. However, it has great potential. The company is installing fiber-optics telephone lines along the railway rights of way between large Canadian cities. It is selling 40 percent of the company to Ted Rogers, who already owns Canada's largest cable company and cellular-phone service. Together they plan to go into the long-distance telephone business in competition with Bell Canada, which has a monopoly in the two rich provinces of Ontario and Quebec.
AMCA International is a collection of engineering and manufacturing firms. It grew out of the railway's original need to build its own bridges. Its latest job was building the movable roof for Toronto's domed stadium.
Canadian Pacific has made itself more attractive by selling off many of its subsidiaries and reorganizing others. It sold CP Air, which is now called Canadian Airlines; Cominco, a mining giant; and Maple Leaf Mills, all in the past three years.
``But a foreign buyer would have trouble getting by the political flack,'' says the Toronto analyst. ``Any buyer would need a big Canadian partner.''