By Sabrina Valle
(Reuters) -Billionaire investor Warren Buffett on Monday shut down speculation of a blockbuster railroad merger, saying his company Berkshire Hathaway is not looking to buy another train company.
Shares of CSX fell about 5% after Buffett told CNBC he was not interested in a merger, dousing investor hopes that Berkshire’s rail unit BNSF would acquire the rival railroad operator. A representative for Berkshire later confirmed Buffett’s remarks.
For weeks, investors have speculated that CSX Corp and BNSF might pursue a merger. Last month, rivals Union Pacific and Norfolk Southern unveiled a surprise $85 billion merger proposal to create the first coast-to-coast freight rail operator in the U.S.
Buffett did meet with the CEO of CSX and discussed greater cooperation, he told CNBC’s Becky Quick on Monday.
Buffett and Greg Abel met with CSX CEO Joseph Hinrichs in Omaha on Aug. 3 in Buffett’s office without any advisors present, according to Berkshire. They made clear to Hinrichs that they would not make a bid for CSX, but believed they could cooperate more and gain some of the same benefits.
Last week, CSX and BNSF announced new coast-to-coast services, strengthening their freight connectivity but tempering market expectations of a merger.
BNSF and CSX did not immediately respond to Reuters requests for comment.
The news puts pressure on CSX CEO Joe Hinrichs, with investors unsatisfied with the company’s performance.
Ancora Holdings, which recently increased its stake in the railroad, has urged the board to explore merger options with BNSF or Canadian Pacific Kansas City, and warned that CSX was falling behind by waiting for Berkshire to make the first move.
(Reporting by Sabrina Valle in New York, Nathan Gomes in Bengaluru; Editing by Shreya Biswas, Alan Barona and David Gregorio)
