SELKIRK — CSX Corps’ pending acquisition of a New England railway company must first be approved by a regulatory board that has already fielded concerns from a rival.
CSX announced Monday, Nov. 30 that it had signed a definitive agreement to acquire Pan Am Railways, Inc., whose subsidiaries comprise the largest regional railroad on the continent.
Pan Am’s network across New England has access to multiple ports and large-scale commodity producers. The transaction will expand CSX’s reach in Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to its existing 23-state network.
“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,” said James M. Foote, president and chief executive officer of CSX.
CSX made nearly $1.5 billion in infrastructure capital expenditures in its network in 2019. Last month, the railway earned a place on the Dow Jones Sustainability Index North America for the 10th consecutive year after a review of 102 companies. It’s place on the index is a distinction it shares with no other railroad. CSX is ranked among the top 15 transportation and transportation infrastructure companies worldwide.
CSX stands to obtain an additional 1,200-mile network and a partial interest in another 600-mile system in Pan Am Southern, in which Norfolk Southern Railway Co. has a joint venture valued at $140 million with Pan Am.
Pan Am’s routes stretch from Saint John, New Brunswick to New York’s Capital District, and reach into northern Maine and New Brunswick. Primary commodities handled include grain, coal, sand and gravel, food products, lumber, paper and pulp, chemicals and plastics, petroleum, processed minerals, metals, scrap metal, finished automobiles and intermodal trailers and containers.
Pan Am entered the rail business in 1981 when the company, then known as Guilford Transportation Industries, purchased the Maine Central Railroad. In 1983, Guilford purchased the bankrupt Boston & Maine. The railroad later purchased Pan Am Airways from bankruptcy in 1998 and revived the airline. In 2006 the company rebranded as Pan Am.
“Pan Am is pleased to reach this agreement with CSX, a North American leader in rail-based freight transportation,” said David A. Fink, president of Pan Am Railways. “This is great news for New England shippers and the national freight network overall.”
Terms of the transaction were not disclosed, but Trains magazine quoted a purchase price of approximately $700 million from people familiar with the matter.
Timothy Mellon, heir of the Mellon family fortune that once exceeded the combined worth of both the Rockefeller and Kennedy dynasties, is Pan Am’s chairman and majority shareholder. Industry experts recall several rumors of railroad companies courting such a sale in the past. Those experts believe Mellon, now 78, finally placed the railroad up for sale in July to pull his family out from the industry. He’s been with the railroad since the beginning.
The transaction is subject to regulatory review and approval by the Surface Transportation Board. Norfolk Southern.submitted a letter to the board in early November to express its concern over the then-rumored transaction.
“One of the main benefits of [Norfolk Southern]’s and Pan Am’s joint control and ownership of [Pan Am Southern] was to strengthen competition with [CSX],” stated Michael L. Rosenthal, counsel for Norfolk Southern Railway Co. Norfolk Southern continued to argue that the regulatory body recognized its 2009 venture with Pan Am “would significantly increase competition” with CSX. “Any [CSX] effort to acquire Pan Am would threaten to materially undermine this existing competition, thus impacting not only Norfolk Southern Railway, but also rail shippers and other railroads.”