Report: Activist Investor Attempting NS Takeover — Commentary Through Our Railway Age Colleagues
Written by TD Cowen
Norfolk Southern
ATLANTA ––According to an unsubstantiated late-Jan. 31 Wall Street Journal article, an investor group led by activist Ancora Holdings Group, LLC intends to run a proxy fight and replace Norfolk Southern President and CEO Alan Shaw. Ancora has reportedly built a position in NS and would likely try to take control of the Board to enact management and operational changes. We highlighted this as the number one risk in our downgrade earlier this week. NSC was up ~5% after hours. Story by Jason Seidl, Matt Elkott, Elliot Alper and Uday Khanapurkar, TD Cowen
NS President and CEO Alan Shaw. NS Photo
Ancora (Ancora Holdings Group, LLC) has reportedly built a $1 billion position in NSC and looks to remove Shaw. NSC has struggled to get itself back on track, and as we highlighted in our downgrade earlier this week, has significantly underperformed vs. its East Coast peer CSX. The article suggests that John Kasich, the former Republican governor of Ohio who led multiple rail initiatives, or Sameh Fahmy, a former executive at Kansas City Southern, CSX and CN, could be Board nominations. The WSJ states that Ancora has met with NSC management in recent weeks. (Photo of Sameh Fahmy, left)
Recall our downgrade earlier this week where we stated: “Given the company’s underperformance vs. its peer group, we wouldn’t be surprised to see an activist step into the arena; pressure on the Board could lead to (1) a more rigorous cost-cutting effort, and (2) changes at the upper management level—such changes may give investors more conviction in NSC’s ability to close the gap between the U.S. Class I’s.”
Ancora should be a familiar name to transport investors as the activist was also involved in attempting to drive changes at CHRW (C.H. Robinson) and holds a 1.8% stake in the company and two seats on the 15-member Board. The activist started with a 0.4% stake in CHRW in 4Q 2021 and built up to 1.9% as of 4Q 2022. We note to investors that Ancora was not successful in placing their preferred candidate in the top job at CHRW, and CHRW has underperformed vs. its peers. Ancora also holds a 2.9% stake in Forward Air, which has proven messy with the activist opposing the company’s proposed deal with Omni resulting in a large drawdown in the company’s stock. (Photo of John Kasich, above)
