Canadian National Gains on Buyback, Steps to Boost Shareholder Returns

© Reuters.

By Dhirendra Tripathi – Canadian National stock (NYSE:) rose 2.9% in early trade on Friday after the company took steps to assuage its shareholders two days after it withdrew its bid to acquire Kansas City Southern (NYSE:).

The company said it will resume share repurchases and expand the program to as much as C$5 billion (around $4 billion) in 2022. It expects to complete the remaining C$1.1 billion of share repurchases from a previously announced exercise by January.

The transporter also aims to cut capital expenditure owing to what it called “current good condition of its network”. It is also targeting a lower operating ratio of 57% by 2022 and hopes to sustain it, an improvement of 460 basis points from the June quarter. One basis point is one-hundredth of a percent.

Operating ratio is the amount spent to earn every dollar. The lower it is, the better.

The company is targeting a near-doubling of its adjusted earnings per share from last financial year’s C$5.31.  

Canadian National on Wednesday withdrew its $33.7 billion cash-and-stock offer that it had offered to counter Canadian Pacific ‘s (NYSE:) $25 billion bid for Kansas City. The company blamed “significant changes to the U.S. regulatory landscape since CN launched its initial proposal” for its decision.

In measures announced in July, the Biden administration tightened rules to promote competition and discourage antitrust practices in industries. This included telecom, airlines, railroad and several other sectors.   

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