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CSX Looks to Broaden Network Through Pan Am Railways Deal logo 12/1/2020

In a bid to expand further, CSX Corporation CSX inked a definitive deal to buy New England’s Pan Am Railways, previously known as the Guilford Rail System. The railway owns and operates nearly 1,200-mile rail network apart from holding a partial interest in the Pan Am Southern system, which covers more than 600 miles. The deal on materialization will offer significant benefits to shippers and local communities.

If CSX’s buyout of North Billerica, MA-based Pan Am gets through, then its reach in Connecticut, New York and Massachusetts will be wider. Moreover, the acquisition will lead to the addition of Vermont, New Hampshire and Maine to this Jacksonville, Fl-based railroad operator’s existing 23-state network.

Per James M. Foote, president and chief executive officer of CSX, “In Pan Am, CSX gains a strong regional rail network in one of the most densely populated markets in the U.S., creating new efficiencies and market opportunities for customers as we continue to grow. We intend to bring CSX’s customer-centric focus and industry-leading operating model to shippers and industries served by Pan Am”.

Terms of the transaction, however, have been kept under wraps. The materialization of the deal is subject to regulatory review and subsequent approval by the Surface Transportation Board (STB).

However, the STB nod might not come easily as the company’s fellow railroad operator Norfolk Southern NSC had reportedly expressed concerns about a probable conflict of interest with CSX buying Pan Am and gaining its full ownership. Notably, Norfolk Southern along with Pan Am currently controls Pan Am Southern.

Zacks Rank & Key Picks

CSX currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the Zacks Transportation sector include Ryder System R  and United Parcel Service UPS, each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Ryder and UPS have gained more than 12% and 44%, respectively, in the past year.

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