Exclusive-Toms Capital seeks CSX meeting after buying stake, sources say

Hedge fund Toms Capital Investment Management has recently made a move to meet with the board at CSX after acquiring a stake in the U.S. railroad operator. This development has sparked speculation that Toms Capital may advocate for a potential merger.

Run by Benjamin Pass, Toms Capital invested in CSX during the second quarter, coinciding with Union Pacific’s announcement of its $71.5 billion acquisition of Norfolk Southern. This deal, the largest ever in the U.S. railroad sector, has led to speculation that more significant mergers may be on the horizon, especially with the easing of antitrust concerns by the Trump administration.

CSX has expressed openness to exploring all avenues to enhance shareholder value. A company spokesperson stated, “CSX welcomes all opportunities to enhance value for our shareholders and engages regularly with them to drive profitable growth and industry-leading customer service.”

Toms Capital disclosed ownership of 5.6 million shares of CSX common stock as of June 30. Unlike some activist investors, the hedge fund prefers to operate behind the scenes and advocate for changes discreetly rather than through public campaigns.

Co-founder Benjamin Pass has a track record of advocating for mergers at companies like U.S. Steel and Kenvue, the maker of Band-Aid and Tylenol. While a representative for Toms Capital declined to comment on the matter, it is clear that the hedge fund may be positioning itself for strategic moves at CSX.

In a separate development, Ancora Holdings, another activist fund, has urged CSX to announce merger plans or face a potential board battle. The fund has criticized CSX CEO Joe Hinrichs for lackluster shareholder returns, poor personnel decisions, and operational performance.

CSX, with a market value of $68 billion, has seen its stock price rise by approximately 1.5% on Tuesday and has climbed 13.5% year-to-date. Investors believe that CSX may need to seek a partner of its own, leading to speculation of potential discussions with BNSF, a West Coast railway owned by Warren Buffett’s Berkshire Hathaway. A merger between CSX and BNSF could create a $200 billion coast-to-coast rail network, marking a significant consolidation in the sector.

The approval of the Union Pacific-Norfolk Southern deal, valued at $85 billion, would create the first coast-to-coast freight rail network spanning 50,000 miles across 43 states. Commerce Secretary Howard Lutnick has expressed support for consolidation in the railway industry, emphasizing the need for increased efficiency in U.S. rail travel.

As the industry undergoes potential transformations, it remains to be seen how CSX and other players will navigate the evolving landscape. With activist investors and strategic mergers shaping the future of the railway sector, stakeholders are closely monitoring developments to assess the impact on shareholder value and operational performance.