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CSX Seeks STB Approval Of Pan Am Railways Acquisition

·3 min read

Eastern U.S. railroad CSX (NASDAQ: CSX) has started the regulatory process to acquire New England short line operator Pan Am Railways in a move that CSX hopes will strengthen its intermodal presence in the region.

The company on Thursday submitted its application to the Surface Transportation Board. The application includes a request both to acquire the Pan Am System, which includes Pan Am Railways, and a 50% ownership of Pan Am Southern (PAS).

"CSX is excited to introduce our customer-centric focus, supply chain solutions and industry-leading operating model to shippers and industries served by Pan Am," CSX said in a statement Friday. "The decision to acquire Pan Am reflects CSX's interest in leveraging its best-in-class service and safety to improve rail's competitiveness with other transportation modes and to reduce the number of trucks operating in New England."

According to CSX's filing, the short lines and assets associated with Pan Am Railways include Pan Am Systems, Pan Am Railways, the Boston and Maine Corp., Maine Central Railroad, Northern Railroad, Portland Terminal, Springfield Terminal Railway, Stony Brook Railroad and Vermont & Massachusetts Railway.

CSX also seeks to acquire partial ownership of PAS, which is also partially owned by competitor Norfolk Southern (NYSE: NSC).

CSX said Friday it had reached an agreement with Norfolk Southern (NS) over PAS' operations. NS will retain ownership of PAS, while a subsidiary of Genesee and Wyoming (G&W) will operate and maintain PAS, which was formerly operated by Springfield Terminal Railway.

"The selection of a G&W affiliate is based upon our desire to maintain competition and enhance rail service in the New England market," CSX said Friday. "G&W's existing presence, relationships and experience will greatly assist the transition."

According to CSX's filing, NS will continue to seek to operate up to one pair of intermodal and automotive trains daily to service facilities in Ayer, Massachusetts. To do this, NS will seek to obtain trackage rights over existing lines owned by four railroads: CSX, two Pan Am railroads and a G&W subsidiary.

CSX also said in its filing that it considers its application requesting to acquire Pan Am as a "minor transaction because it is clear that the proposed transaction ... will have no adverse impact on competition."

The railroad is hoping the board will consider approving the application sometime within the next six months, according to Thursday's filing.

"We look forward to integrating Pan Am into CSX, with substantial benefits to the rail-served industries of the Northeast, and to working in partnership with connecting railroads to provide exceptional supply chain solutions to New England and beyond," CSX said. "We are likewise confident that G&W's subsidiary will bring similar benefits to PAS customers as the successful operator of PAS."

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