Latest news with #AncoraHoldings
Yahoo
4 hours ago
- Business
- Yahoo
Activist investor urges CSX to engage in alternative merger discussions
Ancora Holdings, a prolific activist investor in transports, has once again set its sights on an underperforming Class I railroad and its CEO. In a move that mirrored its successful intervention with Norfolk Southern, Ancora has penned a pointed letter to the board of directors at CSX Corporation, urging immediate action to explore merger options. If the Surface Transportation Board allows Union Pacific to acquire Norfolk Southern, then CSX's primary competitor will be able to offer seamless coast-to-coast service, and CSX won't. If CSX assumes that a merger with BNSF will come, and it doesn't actively pursue other options (like a Canadian rail), Ancora argued, it will be at a distinct disadvantage in merger talks and may be forced to accept a lower valuation dictated by Berkshire Hathaway / BNSF. 'BNSF is a cash buyer that would bring a highly disciplined approach to any negotiations, rendering CSX in a vulnerable position if it does not have alternative parties to speak with,' Ancora wrote. The letter, dated August 6 and addressed to CSX's independent board members, highlights Ancora's dissatisfaction with the company's current trajectory under the leadership of CEO Joe Hinrichs. Ancora emphasizes that CSX's lackluster performance, especially in light of the recent Union Pacific and Norfolk Southern merger, necessitates a swift recalibration of strategy. The letter underscores a pressing need for CSX to engage actively in merger discussions to avoid being left behind in the rapidly evolving rail sector. CSX has struggled in recent years, particularly when compared to its peers in the Class I rail sector. Ancora points out that since Hinrichs took the helm in 2022, the company's operating ratio—a critical measure of efficiency and profitability—has worsened significantly. From a relatively healthy 58% at the start of his tenure, the ratio has ballooned to approximately 67% as normal operating expenses have consumed an increasing share of CSX's revenue. This operational backslide has compounded investors' concerns about the company's direction, as well as its ability to compete effectively in a market defined by extensive consolidation and competition. Ancora Letter to CSXDownload In its correspondence, Ancora argues that Hinrichs' lack of substantive accomplishments—and his failure to seize pivotal merger opportunities—has placed CSX at a competitive disadvantage. The letter notes that while Union Pacific and Norfolk Southern were making headlines with their transcontinental merger, CSX's leadership was reportedly focused on less impactful initiatives, such as managing its social media presence. Ancora is not alone in its criticisms. Conversations with industry analysts, customers, and other stakeholders reveal a shared perception that CSX has been missing the strategic vision required to remain competitive. Many view CSX's current trajectory as a glaring example of how the right leadership, or lack thereof, can significantly influence a company's fortunes. Ancora's recent actions are reminiscent of its approach with Norfolk Southern. The investment firm began its campaign for change at Norfolk Southern in early 2024. Its aggressive push for improved operational efficiency led to notable changes, including the ousting of the CEO due to mismanagement, and ultimately laid the groundwork for the blockbuster merger with Union Pacific. The success of this intervention has likely emboldened Ancora to apply similar pressure on CSX. The letter to CSX's board highlights Ancora's keen interest in seeing CSX pursue discussions with potential partners beyond BNSF, the immediate alternative often mentioned. Ancora is concerned that CSX's leadership has not been proactive in establishing dialogue with other potential partners, such as Canadian Pacific Kansas City Limited (CPKC). Ancora suggests that engaging with CPKC might prove beneficial, as it could catalyze a competitive bidding environment, ensuring that CSX is not cornered into a disadvantageous position. As Ancora pushes for change, the question remains whether CSX will heed the call. The challenges facing CSX are emblematic of broader trends within the railroad industry, where even savvy cyclical investors have struggled to find double-digit gains, and activist investors are increasingly in the driver's seat when it comes to capital allocation and share price performance. The coming weeks will be critical for CSX's management team. They must weigh Ancora's demands against their own vision for the future, while ensuring they do not miss the window of opportunity created by the current wave of consolidation. The post Activist investor urges CSX to engage in alternative merger discussions appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21 hours ago
- Business
- Yahoo
Ancora urges CSX to pursue merger or replace CEO amid rail industry shakeup
(Reuters) -Activist investor Ancora Holdings, in a letter to CSX board disclosed on Monday, urged the railroad to pursue near-term merger options or replace CEO Joe Hinrichs. The activist investor urged the railroad to evaluate potential tie-ups with Berkshire Hathaway-owned BNSF Railway and Canadian Pacific Kansas City in order to determine the best merger partner. It warned that once Norfolk Southern and Union Pacific start operating as a unified transcontinental network, CSX stands to lose the most. "If a deal cannot be struck, we assume it will not take us running a proxy contest to ensure a qualified operator replaces Mr. Hinrichs," the activist investor said. Ancora criticized CSX for failing to engage with Union Pacific earlier this year. "This seems to be the type of mistake a railroad would make when it has an inexperienced and insecure CEO." It also argued that regulators may find it easier to review multiple rail mergers simultaneously, "getting something done as early as possible during the pro-business Trump Administration should also be a priority," it said. "Shareholders cannot afford more missteps as CSX plays catch-up in the rail consolidation race," Ancora said. CSX told Reuters it welcomes opportunities to enhance shareholder value and appreciates input from its investors. Ancora's letter, sent privately to the board of CSX on August 6, comes as Union Pacific has signaled its intent to acquire smaller rival Norfolk Southern in an $85 billion deal that would create the first U.S. coast-to-coast freight railroad and reshape the movement of goods and grain nationwide.
Reuters
21 hours ago
- Business
- Reuters
Ancora urges CSX to pursue merger or replace CEO amid rail industry shakeup
Aug 19 (Reuters) - Activist investor Ancora Holdings, in a letter to CSX (CSX.O), opens new tab board disclosed on Monday, urged the railroad to pursue near-term merger options or replace CEO Joe Hinrichs. The activist investor urged the railroad to evaluate potential tie-ups with Berkshire Hathaway-owned BNSF Railway and Canadian Pacific Kansas City ( opens new tab in order to determine the best merger partner. It warned that once Norfolk Southern (NSC.N), opens new tab and Union Pacific (UNP.N), opens new tab start operating as a unified transcontinental network, CSX stands to lose the most. "If a deal cannot be struck, we assume it will not take us running a proxy contest to ensure a qualified operator replaces Mr. Hinrichs," the activist investor said. Ancora criticized CSX for failing to engage with Union Pacific earlier this year. "This seems to be the type of mistake a railroad would make when it has an inexperienced and insecure CEO." It also argued that regulators may find it easier to review multiple rail mergers simultaneously, "getting something done as early as possible during the pro-business Trump Administration should also be a priority," it said. "Shareholders cannot afford more missteps as CSX plays catch-up in the rail consolidation race," Ancora said. CSX told Reuters it welcomes opportunities to enhance shareholder value and appreciates input from its investors. Ancora's letter, sent privately to the board of CSX on August 6, comes as Union Pacific has signaled its intent to acquire smaller rival Norfolk Southern in an $85 billion deal that would create the first U.S. coast-to-coast freight railroad and reshape the movement of goods and grain nationwide.
Wall Street Journal
a day ago
- Business
- Wall Street Journal
Activist Ancora Pressures Railroad Operator CSX to Explore Deal
Activist investor Ancora Holdings told railroad operator CSX CSX 1.60%increase; green up pointing triangle it should pursue a deal with a rival or replace its chief executive if it doesn't, according to a letter reviewed by The Wall Street Journal. The hedge fund said it is prepared to launch a proxy fight for board seats later this year if CSX doesn't heed its advice. The pressure comes just weeks after Union Pacific struck an $71.5 billion deal to acquire Norfolk Southern NSC 1.57%increase; green up pointing triangle to create the first transcontinental railroad operator in the U.S.
Yahoo
02-08-2025
- Business
- Yahoo
CSX on the Hot Seat from Activist Ancora Following UP-NSC Takeover
CSX may be at a crossroads in the wake of the merger announcement of two of its Class I railroad rivals. Activist investor Ancora Holdings, which launched a proxy fight against Norfolk Southern that sparked a board overhaul and resulted in the ousting of its then-chair, could use its sway to push CSX in a new direction. One such option may be a potential merger. More from Sourcing Journal Why Investors Are Rooting for 'Clean' Fashion Union Pacific Hopes to Win Back Volume in Proposed $85B Norfolk Southern Deal UP-Norfolk Southern Merger Would Control Nearly Half of US Rail Container Traffic In a Wednesday interview with CNBC, Ancora Alternatives president James Chadwick said that the hedge fund has been a 'growing shareholder' in CSX, although the asset management firm has not disclosed its stake. '[CSX] has to make a decision of whether it wants to find a merger partner or whether it's going to have to go retool management,' Chadwick said. When asked if Ancora would consider a campaign against CSX management, Chadwick said 'I think that'll be up to CSX, ultimately.' Chadwick denied that there had been contact with CSX regarding a possible activist push yet, but said 'Whatever actions they make from here will dictate what we do.' In a late July earnings call, CSX CEO Joseph Hinrichs did not rule out the possibility of a merger or acquisition, saying the company was 'always open to anything' to deliver shareholder value. Ancora's potential move could be summed up by Chadwick's criticism that the company is 'underperforming,' particularly in operating ratio. Operating ratio is a top performance metric monitored by analysts, representing operating costs divided by total revenue. The data point typically reflects a railroad's ability to manage its expenses and drive profits, and is expressed as a percentage. The lower the percentage, the better the railroad is at generating profits. Currently, CSX has the worst operating ratio of the Class I railroads at 64.1 percent. In the quarter prior to Hinrichs' start as CEO and president in September 2022, the railroad had a 55.4 percent operating ratio. The conclusion of Ancora's proxy fight with Norfolk Southern last year also involved the operating ratio metric. At the time, the railroad said it planned to reach a sub-60 percent operating ratio within three to four years. Whether Ancora's overtures have gotten to CSX or not, it appears there may be more movement on the railroad's part to enact some level of change. On Thursday, a Bloomberg report said CSX is working with Goldman Sachs as the railroad potentially explores its options. The railroad spoke with the bank about the possibilities of a merger, the report said. CSX did not have additional comment on the report. Before the $85 billion Union Pacific-Norfolk Southern acquisition, reports had surfaced that BNSF Railway was seeking to acquire a rival railroad, and that it tapped Goldman Sachs to get such a deal in motion. However, Warren Buffett, the investing icon who chairs BNSF parent Berkshire Hathaway, had swatted away the Goldman connection, indicating that no one from the investment bank had spoken to him about a possible deal. Given the national implications of a UP-NSC merger, a combination of their respective rivals in the Western and Eastern U.S. would make sense. BNSF Railway covers 32,500 route miles in 28 states and three Canadian provinces, while CSX reaches more than 20,000 route miles across 26 states, Washington, D.C. and two provinces. Like Union Pacific and Norfolk Southern, there is minimal overlap between BNSF and CSX, with the only common areas being Midwestern cities like Chicago, St. Louis, Memphis and New Orleans. With the chatter about the future of CSX and BNSF likely going to linger, the Union Pacific-Norfolk Southern takeover has caught attention of a top U.S. lawmaker railing against the deal. Senate Democratic Leader Chuck Schumer cited the acquisition as one that pushes the industry 'further down the road of dangerous consolidation and monopoly power.' 'The last four decades of railroad mergers have led to worse service, worse safety, worse working conditions, higher costs for shippers—which ultimately means higher prices for consumers,' Schumer argued. 'They also promise no union jobs will be cut. But we've heard that before, from the same executives who've laid off thousands of workers while raking in record profits.' Schumer pointed to union opposition to the deal, including that from the SMART Transportation Division, which is the largest railroad union in America. The Union Pacific-Norfolk Southern acquisition is expected to close by early 2027, if it passes the regulatory approval process of the Surface Transportation Board (STB). The deal would cut the number of U.S.-headquartered Class I railroads from four to three, while a possible BNSF-CSX merger would cut that number to two. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
