CSX Wants Pan-Am. NS Says ‘Not So Fast’

Written by William C. Vantuono, Editor-in-Chief

Shades of the battle between CSX and Norfolk Southern that occurred some 25 years ago over Conrail, but on a smaller scale: CSX is in negotiations to acquire Pan Am Railways, the 1,700-mile Class II previously known as the Guilford Rail System, itself the amalgamation of the Boston & Maine, Maine Central, Portland Terminal Company and Springfield Terminal Railway. NS, in a Nov. 6 filing with the Surface Transportation Board, is opposing the transaction.

NS has a $140 million joint venture with Pan Am called Pan Am Southern (PAS), which gives the former access to New England via trackage rights on the former Boston & Maine Mechanicville, N.Y.-Ayer, Mass., main line, the “Patriot Corridor.” In its STB filing, NS noted that “one of the main benefits of … joint control and ownership of PAS was to strengthen competition with CSX Transportation. Any CSXT effort to acquire Pan Am would threaten to materially undermine this existing competition, thus impacting not only NS, but also rail shippers and other railroads. NS is concerned with CSXT’s potential acquisition of Pan Am, specifically its interest in PAS, and is further concerned with CSXT’s potential use of a voting trust to acquire Pan Am,” which NS said would create “competitive harm.”

NS added that CSX would require STB authority to place Pan Am into a voting trust, which places all voting shares in the hands of a neutral trustee that maintains, during the STB’s merger review, the independence of the separate railroads. 

BMO Financial Group is handling Pan Am’s sale for principal owner Timothy Mellon, 78, and other investors.

Pan Am was founded in 1981 as Guilford Transportation Industries. Mellon controls the privately held company, whose railroad system stretches from the Albany, N.Y., area to Maine. A haulage agreement with J.D. Irving Ltd. subsidiary NBM Railways—Class III’s Eastern Maine Railway Northern Maine Railway, and New Brunswick Southern—extends Pan Am’s reach into northern Maine and Saint John, N.B.

Pan Am and Norfolk Southern formed PAS, which consists of 437 miles of rail lines and trackage-rights agreements, in 2008. Pan Am’s Springfield Terminal subsidiary operates PAS. CSX’s ex-Conrail Boston & Albany line connects with Pan Am in Worcester, Mass.

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