Investors looked past a 22% drop in CSX’s third quarter earnings Thursday and focused on the direction the railroad’s new CEO might take it and the possibility of any strategic deals. CEO Steve Angel promised to focus on making CSX the best-performing railroad. Without promising a merger, Angel said he would consider any strategic opportunities that make sense for shareholders. He also reminded investors that he ran industrial gas supplier Praxair for a decade before the opportunity to merge with rival Li ...

Core Points - The International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD) and Union Pacific Railroad have reached a historic agreement to ensure job security for thousands of railroad workers during the proposed merger with Norfolk Southern [1] Group 1 - The agreement is significant as it represents a commitment to job security for SMART-TD members working in the railroad industry [1]

Core Viewpoint - CSX Corporation is facing criticism from investors due to poor operational performance and lack of merger discussions to strengthen its position in the railroad industry [1][4]. Group 1: Operational Performance - CSX has failed to generate higher shareholder returns since 2022, with operating ratios worsening from 58% in 2022 to approximately 67% year to date [2][8]. - The company is struggling with a lack of competent and experienced employees, which has contributed to its current operational difficulties [2]. Group 2: Investor Concerns - Activist investor Ancora Holdings has expressed dissatisfaction with CSX's performance under CEO Joe Hinrichs, supported by analysts, customers, and former industry executives [3][8]. - Ancora Holdings is particularly concerned about the potential negative impact on CSX's operations if Norfolk Southern Corporation and Union Pacific Corporation proceed with their merger [4]. Group 3: Merger Discussions - Ancora Holdings is urging CSX's board to explore merger options with BNSF Railway Company and Canadian Pacific Kansas City Limited to maximize shareholder value [5][8]. - BNSF is viewed as a cash buyer that could bring a disciplined approach to negotiations, while Canadian Pacific could help CSX compete in a changing rail environment [5]. Group 4: Market Reaction - CSX shares reached a 52-week high of $37.25 on August 19, 2025, before closing at $36.52, following Ancora Holdings' interest in the stock [7].

Transaction Overview - Union Pacific is purchasing Norfolk Southern for an implied value of $320 per share, consisting of 72% stock and 28% cash ($88.82/share)[25] - The offer represents a 25% premium to Norfolk Southern's 30-day volume-weighted average price as of July 16, 2025[25] - The implied enterprise value for Norfolk Southern is $85 billion[25] - The transaction is targeted to close by early 2027, subject to regulatory and shareholder approvals[25, 31] Financial Synergies and Value Creation - The combined company anticipates $2.75 billion in annualized synergies within three years through new revenue and productivity opportunities[25, 26] - The merger is expected to be adjusted EPS accretive early in Year 2, with high single-digit accretion in Year 3+[25] - Combined 2024 free cash flow is $7.3 billion, projected to grow to approximately $12 billion by Year 3[25] - The combined company's debt to EBITDA ratio is estimated at ~3.3x at close, reduced to ~2.8x by Year 2[25] Combined Company Profile - The combined company will be named Union Pacific, headquartered in Omaha, NE, with a core location in Atlanta, GA[25] - The combined route will span over 50,000 miles across 43 states[18, 24] - The combined company will have approximately 52,000 employees[24]