Ancora urges CSX to ‘aggressively pursue a value-maximizing merger’

Ancora Holdings disclosed a letter sent to the board of directors of CSX (CSX) Corporation on August 6. The firm stated: “Since sending this letter via private channels, CSX has ignored us and not even confirmed receipt of our correspondence. 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. All of this leads us to fear that the Company’s Board is exhibiting poor judgment, insufficient oversight and undermining shareholders’ best interests.” The firm’s letter added: “As a firm with more than $10 billion in assets under management and a strong focus on investing in the Class I rail sector, we have closely followed CSX’s sustained operational deterioration under CEO Joe Hinrichs. Unfortunately, aside from bolstering employee engagement, making use of the Company’s private planes and manicuring his social media footprint, we are hard pressed to find any real accomplishments tied to Mr. Hinrichs. His time at CSX is best encapsulated by this anecdote: on the very day Jim Vena and Mark George were announcing the largest merger in industry history, Mr. Hinrichs was out promoting his involvement with the Company’s internship program on his tidily managed LinkedIn profile. Our recent discussions with analysts, customers, former industry executives, retired regulators, and an array of current and prospective shareholders suggest they have an equally low opinion of Mr. Hinrichs, who has now put CSX in the difficult position of playing catch-up in the wake of the announced merger of Union Pacific (UNP) Corporation (“Union Pacific”) and Norfolk Southern (NSC) Corporation (“Norfolk Southern”). It is truly confounding that CSX did not establish a fruitful dialogue with Union Pacific in the first half of 2025, when public momentum was building for a transcontinental railroad. This seems to be the type of mistake a railroad would make when it has an inexperienced and insecure CEO. We are writing to you today to ensure you understand the current consensus among investors: the Board needs to announce in the near term that it is working with identified third-party advisors to explore a range of merger options. Time is of the essence because inaction risks impairing the long-term value of CSX. Once Norfolk Southern and Union Pacific start operating as a unified transcontinental railroad, no railroad has more to lose than CSX… In addition to properly announcing the retention of a bank to explore transaction opportunities, it is imperative that CSX pursues discussions with both BNSF Railway Company and Canadian Pacific Kansas City (CP) Limited to explore all options for maximizing shareholder value. The reality is that 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. We believe CPKC, under the leadership of Keith Creel, represents a compelling partner for CSX as it looks to compete in a new railroading environment. Although one could suggest that the U.S. government could have difficulty approving an acquisition by a Canadian railroad, a transaction could be structured as a reverse merger under which CSX acquires CPKC. Regardless, because of the importance of time here and moving quickly, engaging with CPKC may be the best way to create competitive tension that accelerates a path to an excellent deal.”