Exclusive: Toms Capital seeks CSX meeting after buying stake, sources say
Run by Benjamin Pass, Toms Capital invested in the railroad during the second quarter as Union Pacific (UNP.N), opens new tab was hammering out the finishing details of its $71.5 billion acquisition of Norfolk Southern (NSC.N), opens new tab that was announced last month.
Since news of that deal, which would be the largest ever buyout in the U.S. railroad sector, speculation has been mounting that more big mergers are likely to follow, especially as the Trump administration eases antitrust concerns.
CSX said it is open to all ways to boost the stock price for shareholders.
"We've said it before and we'll say it again: CSX welcomes all opportunities for us to enhance value for our shareholders. CSX appreciates the input of its shareholders and engages regularly with them as it executes on its goals to drive value through profitable growth and industry-leading customer service," a company spokesman said.
Toms Capital held 5.6 million shares of common stock in CSX as of June 30, a new filing showed.
Unlike some activist investors, the hedge fund prefers to stay in the background and push for changes out of the limelight, rather than launching public and noisy campaigns.
Co-founder Pass, however, has a history of pushing for mergers at companies like U.S. Steel and Band-Aid and Tylenol maker, Kenvue (KVUE.N), opens new tab.
A representative for Toms Capital declined to comment.
Also on Tuesday, Ancora Holdings, another activist fund, urged CSX to announce plans to pursue a merger of its own or risk facing a board fight with the firm, according to a letter sent CSX's independent board members and seen by Reuters.
Ancora, which last year won board seats at Norfolk Southern in a bitter proxy fight, also took aim at CSX CEO Joe Hinrichs, blaming him for "anemic shareholder returns", poor personnel selection and "disastrous operational performance."
"Shareholders cannot afford more missteps as CSX plays catch-up in the rail consolidation race," the letter said.
Ancoraalso established a position in CSX during the second quarter and has been considering more purchases, a person familiar with the firm's trading patterns said.
A spokesman for Ancora declined to comment.
CSX is no stranger to activist investors and previously worked with investor Mantle Ridge, whose founder Paul Hilal, now serves on the CSX board.
CSX, which has a market value of $68 billion, saw its stock gain roughly 1.5% on Tuesday and it has climbed 13.5% this year.
CSX is currently the largest railroad in the eastern U.S., operating over 20,000 miles (32,200 km) of track in 26 U.S. states, plus Washington D.C. and two Canadian provinces.
Investors have said CSX needs to find a partner of its own now, raising the possibility of potential talks with other railways, including its West Coast peer BNSF. Owned by Warren Buffett's Berkshire Hathaway (BRKa.N), opens new tab, a merger of the two would create a $200 billion coast-to-coast rail network and mark the most significant consolidation in the sector in decades.
The Union Pacific deal, which values Norfolk Southern at $85 billion after its debt is factored in, if approved by regulators, would create the first coast-to-coast freight rail network with approximately 50,000 miles of track across 43 states.
Commerce Secretary Howard Lutnick indicated early support for consolidation, saying in an interview with CNBC on Tuesday that U.S. railway travel needs to be more efficient.
'Whether that should be through a merger or in any other way, I'll leave that to the regulators and the overseers,' Lutnick said. 'But the concept of making it more efficient to get across the country is obviously something that we applaud. How to get there, I don't know.'
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