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Bill Ackman of Pershing Square Capital Management is shown in Toronto on February 6, 2012.Pawel Dwulit

Activist Bill Ackman opened the door to potential peace negotiations with the board of Canadian Pacific Railway Ltd. offering that he is "absolutely willing" to review candidates to lead the railway other than his favoured choice, Hunter Harrison.

Under pressure from some of its major shareholders to strike a peace agreement with Mr. Ackman ahead of a May 17 proxy contest, CP has in recent days told some investors that it would be prepared to offer the activist at least four seats on its board of directors.

Mr. Ackman responded by offering an olive branch of his own.

"We are absolutely willing to consider other candidates," the hedge fund manager said in an interview Wednesday.

The CP board remains opposed to Mr. Harrison, former chief of rival Canadian National Railway Co., as a replacement for its current chief executive officer Fred Green. Some CP directors, sources said, have suggested that the board is willing to work with the activist to search for a new chief.

A spokesman for CP said it would be premature to speculate about potential discussions with Mr. Ackman.

Mr. Ackman, whose New York hedge fund Pershing Square Capital Management is seeking shareholder support to elect seven new directors to the company's 16-person board, said he has no intention of withdrawing his slate.

He did, however, say he is willing to sit down with CP chairman John Cleghorn and the railway's board to discuss any proposals.

"Mr. Cleghorn has not reached out since early January when he broke off discussions with us. Pershing Square has always been and remains committed to advancing the best interests of the company and its shareholders," Mr. Ackman said.

"If Mr. Cleghorn or other directors have ideas they wish to discuss with us consistent with that objective, they should call me."

According to Globe and Mail interviews with some of CP's major shareholders, Pershing Square appears to have sufficient support to elect, at a minimum, a majority of its proposed slate of seven directors.

Once the new board is elected, Mr. Ackman said he expects the board to initiate a search for a new candidate to replace current CEO Fred Green.

Mr. Ackman said Pershing believes Mr. Harrison is the best choice for CP, but "if we meet another candidate that is better than Hunter through the selection process, we will support that candidate."

Further pressure for a settlement could come from influential U.S. proxy analysis service ISS Governance Services, which is due to issue a report Thursday morning on the proxy battle. ISS typically advises shareholders which directors it believes are best suited to serve on the company's board.

If Mr. Ackman wins support for a majority of his proposed directors from ISS, CP will come under increasing pressure to settle with the activist or face the prospect of seeing some of its blue-chip directors defeated at the May 17 vote.

CP's board adamantly opposes Mr. Harrison as a new CEO, despite his long record of success transforming CN, and before that Illinois Central, into industry leaders.

In a letter to shareholders Wednesday morning, CP chairman John Cleghorn warned that Mr. Harrison is planning "drastic" and "unrealistic" cuts that would eliminate nearly $700-million of costs by 2015, the equivalent of 45 per cent of the railway's work force.