Ancora: CSX Should Pursue Merger

Ancora Holdings Group has sent CSX’s Board of Directors a letter, urging it to vigorously explore merger options.

Ancora, an activist investor that, according to The Wall Street Journal, holds a $100 million stake in CSX, said the railroad should announce the formal retention of an investment bank and conduct ongoing conversations with BNSF Railway Corp. and Canadian Pacific Kansas City Ltd.

It contends CSX’s current standalone future is bleak based on anemic TSR, excessive spending, poor recruitment and the deterioration of operations. Ancora called on the board to terminate CEO Joe Hinrichs if a merger cannot be consummated promptly.

“Since sending this letter via private channels, CSX has ignored us and not even confirmed receipt of our correspondence,” Ancora said in a release. “As this occurred, trusted sources informed us that the Company’s advisors appeared to be breaching their ethical obligations by talking to members of the media – without attribution – about Ancora and what was intended to be a private letter.

“Perhaps we should not be surprised given that the Company’s reported investment bank remains undisclosed, even though the bank has been marketing its representation of CSX in pitch decks disseminated as recently as this week,” the activist investor added. “All of this leads us to fear that the Company’s Board is exhibiting poor judgment, insufficient oversight and undermining shareholders’ best interests.”

The move follows a July announcement that Union Pacific Corp. and Norfolk Southern Corp. agreed to create what they dubbed America’s first transcontinental railroad. The railroads said that the Union Pacific Transcontinental Railroad will span more than 50,000 route miles across 43 states, connecting the East Coast and the West Coast, and linking roughly 100 ports.

Last month, CSX and Canadian Pacific Kansas City announced a new rail transportation routing option that officially launched on Dec. 1, 2024, for customers across the southern U.S. with the Southeast Mexico Express. The new east-west Class 1 corridor connects shippers in Mexico, Texas and the southeastern United States.