The Journal of Commerce (JOC) reported last week that a private equity firm's new minority stake in the Canadian Pacific Railway (CP) has prompted suggestions could lead to a large re-organization or even a full-on sale of the railroad in a consolidation of the North American rail industry.

Peter Nesvold, a Jefferies & Co. analyst, said that the Warren Buffet-led firm Berkshire Hathaway — which bought BNSF Railway two years ago — could be a buyer.

RBC Capital Markets’ analyst Walter Spraklin said a non-railroad or a Canadian pension fund would be a more likely buyer.
Pershing Square Capital Management acquired a 12.2 percent stake in CP and said it wants to hold talks with management, reported the JOC.

Pershing's founder and manager has a reputation for targeting companies that he sees as undervalued, then leaning on management for changes that would drive up the stock.

Pershing said it would "engage in discussions with management, the board, other stockholders… and other relevant parties concerning the business, management, operations, assets, capitalization, financial condition, governance, strategy and future plans."

Nesvold said that if Pershing pushes for a "strategic tie-up," Berkshire could be the buyer, an outcome that would give BNSF coverage of the entire western U.S. and Canada. Nesvold, according to the JOC, noted that a joint venture with Kansas City Southern could create the first trans-North American railroad.

CP has been struggling this year with severe weather problems. Q3 profit fell 5.3 percent to $184 million as increasing costs surpassed a 4.3 percent increase in revenue, to $1.32 billion.