Report: Buffett denies Goldman advising BNSF on potential CSX deal

Berkshire Hathaway Chairman and CEO Warren Buffett today on CNBC denied that BNSF Railway Co. is working with Goldman Sachs regarding a potential acquisition of CSX.

Buffett told CNBC's Becky Quirk that no one from Goldman Sachs had talked to him or Greg Abel, who is slated to succeed Buffett as Berkshire CEO at the end of this year. Berkshire owns BNSF.

Citing anonymous sources, Semafor and Reuters yesterday reported that Berkshire was consulting with Goldman to work on a potential takeover after it was reported that rival Union Pacific Railroad and Norfolk Southern Railway were engaged in early talks about a potential merger.

What remains unclear since the UP-NS talks were reported is who BNSF might target, Baird Equity Research analysts said in a statement yesterday. The Baird report was issued before Buffett commented to CNBC.

"Although our official view is that Berkshire is not inherently in favor of a transaction, leadership likely recognizes that the die could soon be cast," the Baird analysis stated. "From that perspective, the real risk is not what Berkshire would have to pay to own the company it believes it is best positioned to merge with, it’s what it could cost not to. From that perspective, we think Buffet is likely less focused on whether the price is perfect and more concerned with the implications of a long-term strategic loss that affects competitive positioning and franchise value."

Noting that any merger between two Class Is would be subject to approval from the Surface Transportation Board and U.S. Department of Justice, "the more important question is how the current administration will officially respond," according to Baird's analysis.

Although there has been no public reaction from policymakers or regulators so far, "there are strong arguments to support the view that a transcontinental rail network would reduce interchange delays, lower fixed costs, and enable more seamless end-to-end service," it stated.