In a letter to CSX’s (CSX) board, activist investor Ancora Holdings urged the railroad operator to pursue merger options or replace CEO Joe Hinrichs. The pressure from the activist investor comes in the wake of the recently announced $85 billion merger between Union Pacific Corporation (UNP) and Norfolk Southern Corporation (NSC) to create the first transcontinental railroad operator in the U.S. In fact, the hedge fund has warned that it would launch a proxy fight for board seats later this year if CSX doesn’t strike a merger deal or replace its CEO.
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Interestingly, Ancora had a prolonged battle with Norfolk Southern last year, before striking a deal in November 2024.
CSX Faces Activist Investor Pressure to Consider Merger Deals
Ancora urged CSX to announce the hiring of an investment bank to explore strategic options and address investors’ concerns. The hedge fund believes that the company should aggressively explore merger deals, given the ongoing consolidation in the industry.
In fact, Ancora advised CSX to hold discussions with BNSF Railway Company, owned by Berkshire Hathaway (BRK.A) (BRK.B), and Canadian Pacific Kansas City Limited (CP) to explore all options for maximizing shareholder value. The activist investor contended that CSX should consider a deal promptly, as regulators will have a “much easier time reviewing multiple rail mergers at once.”
Furthermore, Ancora explained that it wants CSX’s board to act with urgency, given “anemic” shareholder returns under the leadership of Hinrichs. The activist investor also accused the CEO of poor personnel selection, saying, “Hinrichs seems to have built a leadership team of junior varsity executives.”
Meanwhile, CSX said in a statement that it welcomes all opportunities that would increase its value and appreciates shareholders’ suggestions.
Is CSX Stock a Good Buy?
Wall Street has a Moderate Buy consensus rating on CSX stock based on 13 Buys and seven Holds. The average CSX stock price target of $38.50 indicates 5.4% upside potential. CSX stock has risen 13% so far this year.
