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Canadian National Railway Co. said on Monday Jim Vena, who was backed by a group of investors to lead the country’s largest railway operator, had pulled out of the running to serve as its new chief.

Shares of Canadian National fell as much as 6.5 per cent on the news.

The former Union Pacific executive was pitched for the top job by TCI Fund Management, which is Canadian National’s second-largest shareholder with a 5-per-cent stake.

“Vena looked to us like an ideal candidate considering his contribution to Union Pacific’s solid OR [operating ratio] progress since implementing PSR [precision scheduled railroading] in 2018,” Morningstar analyst Matthew Young said.

“There’s a good chance he would have helped reinvigorate CN’s operating strategy, and we suspect shareholders would have welcomed his leadership.”

Canadian National in September lost out to Canadian Pacific Railway in a bidding war to acquire Kansas City, that would have created the first direct railway route to link Canada, the United States and Mexico.

The fallout of the deal caused chief executive Jean-Jacques Ruest to announce his retirement amid investor demand for his exit.

Mr. Ruest will retire at the end of January and the company is expecting to announce a new chief by then.

TCI Fund did not immediately respond to a Reuters request for comment.

The Wall Street Journal reported in October that activist investor Elliott Management Corp., which owns a big stake in Canadian National, had also thrown its weight behind Mr. Vena’s candidacy.

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