{"id":18069,"date":"2017-02-07T13:43:33","date_gmt":"2017-02-07T18:43:33","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/?p=18069"},"modified":"2017-02-07T13:43:58","modified_gmt":"2017-02-07T18:43:58","slug":"possible-corporate-takeover-of-csx","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2017\/02\/possible-corporate-takeover-of-csx.html","title":{"rendered":"Possible corporate takeover of CSX"},"content":{"rendered":"

\r\nCSX stock went up 29% in January on rumors of a corporate takeover.\r\nThe same CSX that let a plume of toxic chemicals leak below its\r\n\r\n<\/a>\r\nRice Rail Yard in Waycross, including into the upper Suwannee River watershed.\r\nIt’s not clear a corporate takeover would do anything to stop that,\r\nor other possible contamination in for example Valdosta.\r\n

\r\nJohn Burr, WJCT, 6 February 2017,\r\n\r\nBusiness Brief: CSX Board To Consider Possible Takeover Friday<\/a>,\r\n\r\n\r\n

\r\n

\r\nThis week, the board of the Jacksonville-based CSX railroad will\r\nconsider a company takeover.\r\n<\/p>\r\n

\r\nCSX is the largest publicly owned company in town and North\r\nAmerica’s third-largest railroad, valued at $43 billion. About 3,500\r\nemployees work for the company in Northeast Florida.\r\n<\/p>\r\n

\r\nFormer Canadian Pacific railroad CEO Hunter Harrison and his\r\naffiliated hedge fund, Mantle Ridge, are targeting CSX.\r\n<\/p>\r\n

\r\nHarrison approached CSX twice in recent years with an offer to merge\r\nwith Canadian Pacific but was rebuffed. Now, according to the Wall\r\nStreet Journal, he’s meeting with CSX board members to negotiate the\r\nterms of a takeover. It’s reported Harrison wants to name at least\r\nthree new board members at a meeting set for Friday, Feb. 10, and\r\neffectively take control of the company and become the CEO,\r\nreplacing current CEO Michael Ward.\r\n<\/p>\r\n

\r\nDon Capener, the dean of Jacksonville University’s Davis College of\r\nBusiness, says although he’s not super familiar with the terms of\r\nthe deal, based on the history of other takeovers, Jacksonville\r\nshould be wary.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nThere’s more in that WJCT article about no talk from CSX about\r\npoison pills to ward off a takeover, which could mean that CSX\r\nwelcomes it.\r\n

\r\nNeha Chamaria, Fox Business (apparently from fool.com), 6 February 2017,\r\n\r\nWhy CSX Corporation Stock Popped 29% in January<\/a>,\r\n

\r\n

\r\nWhat happened\r\n<\/H4>\r\n

\r\nShares of railroad giant CSX Corporation(NASDAQ: CSX) shot through\r\nthe roof in mid-January after headlines announced rumors of growing\r\ninterest in the company from activist investor and former CEO of\r\nCanadian Pacific Railway (NYSE: CP) Hunter Harrison. CSX ended\r\nJanuary with hefty 29% gains.\r\n

\r\nSo what\r\n<\/H4>\r\n

\r\nActivist investment isn’t anything new, but CSX’s is an interesting\r\ncase. To begin with, Harrison suddenly stepped down as CEO of\r\nCanadian Pacific last month. The Wall Street Journal\r\n\r\nreported<\/a>\r\nthat he had quit the company to team up with another\r\nactivist investor, Paul Hilal, to target CSX and gain representation\r\non its board of management. Investors in CSX may remember that\r\nHarrison had even made a friendly takeover offer to CSX last year in\r\nhis capacity as Canadian Pacific’s CEO. Yes, Harrison has been\r\neyeing CSX for quite some time now.\r\n<\/p>\r\n

\r\nAs investor activism is usually deemed to unlock greater shareholder\r\nvalue, investors were quick to jump on the CSX bandwagon on the\r\nrumors. Also, the fact that Harrison played a phenomenal role in\r\nturning Canadian National Railway’s fortunes around before taking\r\nover at Canadian Pacific could have further fueled CSX investors’\r\nhopes. CSX, after all, has been facing considerable pressure on its\r\ntop and bottom lines — for full-year 2016, it reported 6% and\r\n13% declines in revenue and net income, respectively, and an\r\noperating ratio of 69.4% in 2016. Just to give you an idea, Canadian\r\nPacific’s 2016 operating ratio came in at only 58.6%. A lower ratio\r\nindicates higher efficiency.\r\n<\/p>\r\n<\/blockquote>\r\n

\r\nGreater operating efficiency could be achieved through even less environmental care, not to mention paying employees less,\r\nso yes, there’s reason to be wary.\r\n

\r\nSeekingAlpha, 30 January 2017,\r\n\r\nCSX: Could Hunter Harrison Become CEO?<\/a>,\r\nincludes this point:\r\n

\r\n