Canadian Pacific Ltd., one of Canada's biggest and oldest companies, said it would split into five publicly traded firms, a move aimed at shedding a conglomerate discount that had dogged its stock. Besides CP Rail, Canada's No. 2 railway, Canadian Pacific owns 86 percent of cash-rich PanCanadian Petroleum Ltd., the country's top oil and gas explorer and producer, as well as Fording Coal Ltd., CP Ships, a global shipping firm, and CP Hotels.
Canadian Pacific, the C$18-billion ($12-billion) transport, energy and hotel concern best known for its national railway, which tied the vast country together in the 19th century, had long been viewed as ripe for breakup because the sum of its parts were seen to be worth more to investors than the whole.
"Unlocking shareholder value, you have to like that. It's a smart move," said Rick Hutcheon, chief executive of Toronto fund management firm RKH Investments. "The conglomerate phase or conglomerate fad was really a mania of the '60s and '70s and it's not appropriate today. People want pure plays."
In an interview, O'Brien said executives mulled a host of options, including sales of units, before arriving at the breakup decision for the profitable company.
CP Ships is the world's sixth largest container shipping line with operations centered on the North Atlantic -- where it is the largest carrier -- Australasia and Latin America. The company benefited from a 34-percent increase in container traffic in the past year reflecting its increased ownership in subsidiary Americana Ships. CP Ships has just come off a two-year reorganization of all services and its fleet. Net income in 2000 more than doubled to C$234 million from C$107 million.
PanCanadian Petroleum is Canada's largest oil and natural gas exploration and production company with a market capitalization of C$11 billion. It pumps out more than one billion cubic feet of gas and 128,000 barrels of oil a day from its operations spread across the country as well as the U.S. Gulf of Mexico, the North Sea, Africa and Australia. It is one of the most active explorers in the country, announcing recently that it will boost 2001 capital spending by 15 percent to C$1.5 billion and drill more than 2,000 wells.
It also owns energy marketing firms, natural gas liquids extraction facilities power plants and pipelines. For the year, the Calgary producer reported profit climbed to C$1.04 billion from C$350 million. Cash flow soared to C$2.47 billion from C$1.11 billion. – (Reuters)