CSX stock went up 29% in January on rumors of a corporate takeover.
The same CSX that let a plume of toxic chemicals leak below its


Rice Rail Yard in Waycross, including into the upper Suwannee River watershed.
It’s not clear a corporate takeover would do anything to stop that,
or other possible contamination in for example Valdosta.

John Burr, WJCT, 6 February 2017,

Business Brief: CSX Board To Consider Possible Takeover Friday,

This week, the board of the Jacksonville-based CSX railroad will
consider a company takeover.

CSX is the largest publicly owned company in town and North
America’s third-largest railroad, valued at $43 billion. About 3,500
employees work for the company in Northeast Florida.

Former Canadian Pacific railroad CEO Hunter Harrison and his
affiliated hedge fund, Mantle Ridge, are targeting CSX.

Harrison approached CSX twice in recent years with an offer to merge
with Canadian Pacific but was rebuffed. Now, according to the Wall
Street Journal, he’s meeting with CSX board members to negotiate the
terms of a takeover. It’s reported Harrison wants to name at least
three new board members at a meeting set for Friday, Feb. 10, and
effectively take control of the company and become the CEO,
replacing current CEO Michael Ward.

Don Capener, the dean of Jacksonville University’s Davis College of
Business, says although he’s not super familiar with the terms of
the deal, based on the history of other takeovers, Jacksonville
should be wary.

There’s more in that WJCT article about no talk from CSX about
poison pills to ward off a takeover, which could mean that CSX
welcomes it.

Neha Chamaria, Fox Business (apparently from fool.com), 6 February 2017,

Why CSX Corporation Stock Popped 29% in January,

What happened

Shares of railroad giant CSX Corporation(NASDAQ: CSX) shot through
the roof in mid-January after headlines announced rumors of growing
interest in the company from activist investor and former CEO of
Canadian Pacific Railway (NYSE: CP) Hunter Harrison. CSX ended
January with hefty 29% gains.

So what

Activist investment isn’t anything new, but CSX’s is an interesting
case. To begin with, Harrison suddenly stepped down as CEO of
Canadian Pacific last month. The Wall Street Journal

reported
that he had quit the company to team up with another
activist investor, Paul Hilal, to target CSX and gain representation
on its board of management. Investors in CSX may remember that
Harrison had even made a friendly takeover offer to CSX last year in
his capacity as Canadian Pacific’s CEO. Yes, Harrison has been
eyeing CSX for quite some time now.

As investor activism is usually deemed to unlock greater shareholder
value, investors were quick to jump on the CSX bandwagon on the
rumors. Also, the fact that Harrison played a phenomenal role in
turning Canadian National Railway’s fortunes around before taking
over at Canadian Pacific could have further fueled CSX investors’
hopes. CSX, after all, has been facing considerable pressure on its
top and bottom lines — for full-year 2016, it reported 6% and
13% declines in revenue and net income, respectively, and an
operating ratio of 69.4% in 2016. Just to give you an idea, Canadian
Pacific’s 2016 operating ratio came in at only 58.6%. A lower ratio
indicates higher efficiency.

Greater operating efficiency could be achieved through even less environmental care, not to mention paying employees less,
so yes, there’s reason to be wary.

SeekingAlpha, 30 January 2017,

CSX: Could Hunter Harrison Become CEO?,
includes this point:

• Harrison would likely make deep cuts to CSX’s labor costs (28% of revenue) to bring its operating ratio lower.

Lower paid employees are not going to care more about toxic chemicals.

It also includes this point:

• If Harrison became CEO, it would likely spur the stock. CSX’s prospects are tied to coal, which is subject to vagaries of the market.

With Georgia Power and the other Southern Company subsidiaries
(Alabama Power, Mississippi Power, and Gulf Power in the Florida panhandle)
moving away from coal, and Georgia Power’s recent acquisition of pipeline
company AGL, with its subsidiary Pivotal LNG

having a deal to deliver LNG from Georgia to Crowley Maritime’s Carib Energy at Jaxport for export,
and Pivotal LNG’s
“construction of a new facility in Jacksonville, FL.” expected to be operationan “early 2017”,
maybe CSX wants to transport some of those LNG shipping containers to Jaxport?

-jsq

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