CALGARY – Canadian Pacific Railway says it will repurchase up to 5.27 million or three per cent of its shares over the next year.
The Calgary-based railway says the normal course issuer bid, which has been accepted by the Toronto Stock Exchange, demonstrates its confidence in the long-term prospects of the company.
“Our strong balance sheet and improved cash flow affords us the flexibility to reward shareholders while continuing to pursue our business strategy and invest in the franchise,” CEO Hunter Harrison stated Tuesday.
CP Rail (TSX:CP) will be limited to acquiring up to 82,954 common shares per day, representing 25 per cent of the average daily trading volume during the prior six months.
Walter Spracklin of RBC Capital Markets said the repurchase program is earlier and larger than the 4.4 million shares he had expected.
“We view this announcement favourably, however, we do not expect it to be a complete surprise to the market in light of CP’s strong progress on restructuring initiatives and solid free cash flow generation of about $760 million pre-dividends in 2013,” he wrote in a report.
CP shares were up 75 cents to $172.06 in morning trading on the TSX.