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Rail News Home M&A

11/10/2020



Rail News: M&A

NS concerned about CSX efforts to acquire Pan Am Railways


In a Nov. 6 letter to the STB, Norfolk Southern said it's concerned a CSX acquisition of Pan Am Railways would harm rail competition.
Photo – panamrailways.com/Ted Krug

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Norfolk Southern Railway is expressing concerns to the Surface Transportation Board (STB) about CSX's potential acquisition of Pan Am Railways Inc., the 1,700-mile New England regional.

Since 2009, NS has been a partner in a joint venture with Pan Am to control Pan Am Southern LLC (PAS), which provides NS access to New England via trackage rights.

A CSX spokesperson today verified that CSX is in discussions with Pan Am regarding a possible transaction.

"As part of this effort, CSX has engaged directly with Norfolk Southern to understand any issues they might have," the CSX spokesperson said in an email.

NS officials said in a Nov. 6 letter to the STB that they are concerned about the impact a CSX-Pan Am acquisition would have on competition, and are further concerned about CSX using a voting trust to acquire the regional.

"One of the main benefits of NSR's and Pan Am's joint control and ownership of PAS was to strengthen competition with CSXT," the NS letter states. "Indeed, as the board noted in its approval of the 2009 NSR/Pan Am proceeding, the transaction 'would significantly increase competition between railroads by providing an upgraded East-West main line route to compete with a parallel main line route operated by CSXT.' "

A CSX acquisition of Pan Am "would threaten to materially undermine this existing competition, thus impacting not only NS, but also rail shippers and other railroads," the letter adds.

NS claims that the harm to competition would start as soon as Pan Am is placed into a voting trust, and asked the board to review any such proposal. One of the "change of control" rights in the NS joint venture agreement with Pan Am specifically includes the establishment of a voting trust, NS said.

"Given the uncertainty surrounding whether CSXT will be permitted to establish a voting trust, NS is deferring its change of control rights until the board's resolution of that issue," NS said.



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