Activist investor firm's bid to take over Norfolk Southern gains steam

An activist investor campaign to gain control of Atlanta-based Norfolk Southern has won some support from unions and others as a crucial Thursday shareholder vote approaches.

Ancora Holdings Group, the activist investor firm, wants to replace a majority of Norfolk Southern’s board members and its CEO, Alan Shaw. Ancora also wants former UPS executive Jim Barber as the CEO of the Atlanta-based railroad, and wants to install a former CSX executive as chief operating officer.

On Thursday, shareholders will decide the fate of Norfolk Southern’s leadership at the company’s virtual annual meeting.

Since the February 2023 fiery derailment in East Palestine, Ohio, of a Norfolk Southern train carrying hazardous materials, the railroad has been beleaguered by public criticism and well over $1 billion in charges related to the wreck. Last month, the company reported a steep decline in first quarter profit, after tallying hundreds of millions of dollars of expenses in the fallout from the derailment.

Norfolk Southern management and Ancora and its allies have bombarded investors and analysts with last minute appeals for support, turning this into a sort of corporate version of a presidential campaign. And like an unpredictable election season, there’s already been an October surprise.

A major union that represents some of Norfolk Southern’s workforce, the Brotherhood of Locomotive Engineers and Trainmen (BLET) division of the Teamsters union, has switched allegiance from management to Ancora.

In February, after Ohio-based Ancora launched its takeover bid, BLET’s general chairmen called Ancora’s proposal “reckless,” “bad for investors” and “likely to lead to more train wrecks.”

But in late April, Ancora announced it had won the support of BLET, along with the Brotherhood of Maintenance of Way Employees Division of the Teamsters. Together, the two labor groups make up about half of the unionized workers at Norfolk Southern, according to Ancora.

Norfolk Southern had roughly 20,000 employees, and about 80% of them are unionized.

Another major union at Norfolk Southern, the International Association of Sheet Metal, Air, Rail and Transportation Workers Transportation Division (SMART-TD), is opposed to a takeover by Ancora and accused BLET of “deciding to buy in with a hedge fund.”

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