CSX’s application to acquire Pan Am Railways denied

The Surface Transportation Board (STB) wants more information about how CSX (NASDAQ: CSX) will integrate Pan Am Railways into its network should it succeed in acquiring the short line operator.

STB said Wednesday that CSX’s application to acquire the New England short line was incomplete. The board considers CSX’s proposed acquisition a “significant” one, and as a result, it is asking CSX to submit a market analysis that includes discussion and data about how the Pan Am acquisition would affect intermodal and intramodal competition as well as impact local markets.

The analysis can include data such as current and projected traffic flows, data underlying sales forecasts or market goals, interchange data, market share analysis and/or shipper surveys, according to STB.

STB acknowledged that CSX submitted a market analysis in April but the board said the analysis doesn’t sufficiently describe the impacts of the proposed transaction on intermodal and intramodal competition.

In response to Wednesday’s decision, CSX said it “appreciates that the STB desires additional information and we will provide it as expeditiously as possible.”

“We are confident that the pro-competitive acquisition of Pan Am will bring significant benefits to stakeholders in the Northeastern United States and beyond and look forward to presenting further detail illustrating those benefits,” CSX said.

STB’s decision on Wednesday is the latest regulatory action since CSX submitted a request in February asking to acquire Pan Am Railways and for the board to treat CSX’s request as a “minor” transaction. A “minor” transaction would require fewer regulatory benchmarks to hit.

But the board determined in March that CSX’s acquisition proposal should be considered as a “significant” transaction,” which is subject to different procedural and informational requirements. CSX followed suit in April, but Wednesday’s decision by the board indicates that CSX must resubmit its application in order to continue.

CSX’s plans to acquire Pan Am Railways has attracted regional attention from local and state officials and planning organizations, as well as from short line operators who have questioned how the acquisition would affect their operations.

Also, Amtrak filed a testimony on May 17 saying it has “serious concerns” about how passenger rail service would be affected in the area as a result of CSX’s acquisition.

CSX is seeking to acquire Pan Am Systems and Pan Am Railways, which would also include acquisition of the Boston & Maine, the Maine Central Railroad, Northern Railroad, Portland Terminal, Springfield Terminal Railway, Stony Brook Railroad and Vermont & Massachusetts Railroad.

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