Foote Confident Pan Am Sale Will be OKed

CSX CEO James Foote expressed optimism this week that his company’s plan to acquire New England regional Pan Am Railways will be successful.

The U.S. Surface Transportation Board has twice complicated spurned CSX’s efforts to buy Pan Am, most recently saying its merger application was incomplete.

“We’re just in the early stages of seeking authority to complete the transaction from the Surface Transportation Board,” Foote said in addressing the Bernstein Strategic Decisions Conference.

“And I’m confident just because of the positive nature of it. Clearly it improves the overall rail transportation network, especially in the New England region.”

CSX announced last November its plans to acquire Pan Am. The STB in March ruled the transaction was a significant one that would thus receive a more comprehensive regulatory review.

The two carriers had sought to have the merger treated as a minor transaction that would have received less stringent review.

CSX said it is pulling tougher more information to share with the STB, including a full analysis of how the deal will affect railroad competition and rail-truck competition in New England.

A decision by the STB on the merger is not expected until sometime in 2022.

Foote says he doesn’t believe the proposed Canadian National-Kansas City Southern merger will trigger a round of Class I railroad mergers.

“You can make a case that consolidation might be good,” Foote said.

He pointed out that in 1980 there were 61 Class 1 railroads, some of which were not in good financial condition.

“They were a basket case, their service was horrible, there was no capital investment,” Foote said. “And over the years the railroads consolidated into what they are today and the core infrastructure of the rail industry now is significantly better than it was. And, No. 1 and most importantly, the seamless nature and the single line service provided today is much better than it was.”

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