CSX Chief Executive Open to Deal as Rivals Pursue Mega Merger
(Bloomberg) — The chief executive officer of freight rail operator CSX Corp. is focused on generating returns from improved efficiency and performance — but he’s also open to merger possibilities as industry rivals strengthen.
“I’m open to any avenue that can create shareholder value,” Steve Angel, CSX’s chairman and CEO, said in an interview Thursday. Ancora Holdings Group bought a stake in the company before Angel’s arrival in September, and the activist investment firm has said the railway should pursue a merger.
Angel, similar companies Union Pacific Corp. with Norfolk Southern Corp. He acknowledged that the proposed $72 billion merger between and U.S. would create challenges and opportunities for Jacksonville, Florida-based CSX. He said the Surface Transportation Board has “every tool at its disposal” to review the merger. “So we need to see how this plays out.”
Asked if he had a preference for a merger partner, Angel said: “We have our opinion on that, but I’ll keep that to myself.”
Meanwhile, Union Pacific-Norfolk Southern said it was content to allow the merger approval process to proceed, noting that the STB’s approach was so comprehensive that it was apparently written to discourage consolidation. On his first day on the job, he was given a briefing. After re-reading it, he said he thought: “Why would anyone attempt that? The answer is because who’s in the White House today.”
Angel, who gained a reputation as a skilled operator while CEO and then chairman of industrial gas company Linde Plc, focuses on increasing shareholder returns that do not require growth. “I like the growth, but I’m confident in the costs,” he said.
He began his career at General Electric Co. in 1979; he held various management positions there and was Linde’s chairman until earlier this year; he was previously CEO of the firm and its predecessor, Praxair Inc.
Initial changes at CSX included closing its aviation division and selling its corporate jets, reducing the use of consultants, canceling the family day appreciation event and other budgeting measures.
Changes were also made to the management team; Kevin Boone was appointed chief financial officer in October, replacing Sean Pelkey. Riz Chand was appointed chief human resources officer this month due to the retirement of chief administrative officer Diana Sorfleet.
Angel aims to create a culture of “continuous improvement” by making incremental changes in collaboration with multi-union staff. He noted his experience working with such groups at Linde.
“The union representatives at CSX are pretty smart people. So I think you have to have open communication with them. You have to explain what’s going on in the industry and what you’re trying to accomplish. And then you have to find a way to do it together,” he said.
CSX has a rail network of nearly 20,000 miles between 26 states, the District of Columbia and the Canadian provinces of Ontario and Quebec, according to its website.
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