(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.
(Reporting by Abhinav Parmar in Bengaluru; Editing by Alan Barona)
