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Investing.com -- CSX Corporation (NASDAQ:CSX) stock fell as much as 5% Friday morning after announcing new intermodal service agreements with BNSF Railway, amid recent activist pressure for the company to pursue merger options.
The two railroads revealed plans to launch several new coast-to-coast intermodal services connecting the western and eastern United States. These include direct domestic services between Southern California and both Charlotte, North Carolina and Jacksonville, Florida, as well as between Phoenix, Arizona and Atlanta, Georgia. New international services will also connect the Port of New York and New Jersey, and Norfolk, Virginia with Kansas City.
"Through this new connectivity, CSX and BNSF are connecting Western and Eastern U.S. markets, creating faster, more reliable service," said Drew Johnson, Vice President of Intermodal Sales and Marketing at CSX.
The announcement comes just days after activist investor Ancora sent a letter to CSX’s board calling for the company to "aggressively pursue a value-maximizing merger" to avoid what it termed a "permanent impairment of value." Ancora specifically suggested CSX should be in discussions with BNSF or Canadian Pacific (NYSE:CP) Kansas City Limited.
In its letter, Ancora criticized CSX’s "anemic" total shareholder return, excessive spending, and operational deterioration, stating: "We are writing to you today to ensure you understand the current consensus among investors: the Board needs to announce in the near term that it is working with identified third-party advisors to explore a range of merger options."
The collaboration announcement with BNSF appears to have disappointed investors hoping for a full merger between the companies, contributing to Friday’s stock decline.