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Canadian National Railway (NYSE:CNI) and Canadian Pacific Railway (NYSE:CP) are the major railroads in Canada. Activist investor Bill Ackman of hedge fund Pershing Square Capital Management has initiated a corporate battle to take control of the Canadian Pacific railroad and implement management changes. With a bet of $1.4 billion, Mr. Ackman currently holds 14.2% of the company.

Promising ‘a nuclear winter’ if his demands are not met, the powerful hedge fund manager proposed to replace the current Canadian Pacific CEO Fred Green with the former CEO of Canadian National, Hunter Harrison. This proposal was promptly dismissed by the CP board which is filled with Canada’s old-world business elite. However, Mr. Ackman, who is an American, considers these individuals to be inept at running the railroad. Hence this could be a long, drawn out power struggle between Mr. Ackman and the CP board. For more juicy details readers may want to checkout an excellent article titled The story behind the all-out war to control CP published Saturday by The Globe and Mail.

Some of the key metrics of the two railroads are listed below:

S.No. Metric Canadian National (CNI) Canadian Pacific (CP)
1 Revenues in 3Q, 2011 C$2.30 Billion C$1.3 Billion
2 Net Income in 3Q, 2011 C$590.0 Million C$186.8 Million
3 Total Number of Employees 23,353 15,460
4 Track Miles Owned 20,500 14,800

Source: Company websites

Canadian National has a much stronger presence in the U.S. than Canadian Pacific and Canadian National dominates the industrial heartland of eastern Canada.

In terms of long-term equity performance, which is better – CN or CP? (Click to enlarge)

Source: Google Finance

Canadian National easily beat Canadian Pacific in the period shown above. Canadian Pacific’s stock performance in the past few years has been poor. This is one reason Mr. Ackman believes it is time for a major shakeup of the company’s top management.

Microsoft’s (NASDAQ:MSFT) Bill Gates is a major shareholder of Canadian National, holding more than 46 million shares or 10.04% of the Montreal-based railroad as of April last year.

Related Infographic:

(Click to enlarge)

Source: CP’s rail reach, The Globe and Mail

Disclosure: Long CN

Source: Battle Of The Railroads: Canadian Pacific Vs. Canadian National