10/24/2013 06:11 EDT | Updated 01/23/2014 06:58 EST

Pershing Square announces public offering of CP Rail shares valued at $880M

CALGARY - Pershing Square Capital Management has announced a public offering of more than 5.9 million shares of Canadian Pacific Railway Ltd. (TSX:CP) that would have a value of more than $880 million at market prices.

The deal makes good on a pledge by activist investor Bill Ackman back in June to divest seven million CP shares within a year, taking advantage of a big run-up in the railway's stock.

Ackman led a bruising proxy fight against the railway's previous management aimed at wringing greater value out of CP stock.

Since ousting former CEO Fred Green and replacing with veteran railway executive Hunter Harrison, the company stock has been on a roll.

The issue closed up more than 10 per cent, or $13.79, at a best-ever $148.53 on Wednesday on the Toronto Stock Exchange after CP reported record earnings and revenue and its best-ever operating ratio, a measure of a railway's efficiency.

The stock fell 58 cents to $147.95 on Thursday.

The offering of just under 5.97 million shares by funds managed by Pershing Square will be underwritten by Credit Suisse, Bank of America Merrill Lynch and Morgan Stanley.