Hunter Harrison is stepping down as CEO of Canadian Pacific Railway and partnering with activist investor Paul Hilal in an effort to put Harrison into CSX's senior management, The Wall Street Journal reported Wednesday.
Hilal launched his activist fund Mantle Ridge after leaving William Ackman's Pershing Square Capital Management last year. Mantle has raised more than $1 billion for a single investment, a source familiar with the matter told the Journal.
CSX shares leaped 23 percent, their best daily performance since Nov. 3, 1980, when shares climbed 21.15 percent. Shares hit an all-time high in morning trade.
Harrison is departing as CEO five months earlier than originally scheduled. Canadian Pacific's President and Chief Operating Officer Keith Creel will take on the role starting January 31.
Additionally, CSX reported earnings on Tuesday, missing profit estimates by a penny at 49 cents per share, though revenue topped expectations, according to Thomson Reuters consensus estimates. The company said it remains optimistic due to improving business conditions, citing a stronger U.S. dollar and low commodity prices.
The railroad company's stock is currently leading the Dow Jones transportation average, which briefly climbed more than 1 percent Thursday, outperforming the broader markets.
A spokesman for CSX said in a statement the company is open to the views of all its shareholders and will "actively evaluate" those of Mantle Ridge.
"Likewise its Board and management team remain supportive of the Company's strategic growth strategy, which has started to deliver sustainable value for shareholders," said CSX spokesman Gary Sease.
Sease said CSX looks forward to discussing strategies for driving earnings growth and shareholder value with all its shareholders.
Harrison's communications team said they had nothing to add beyond a Wednesday press release announcing the CEO changes at Canadian Pacific.
Mantle Ridge and Canadian Pacific did not immediately respond to CNBC requests for comment.