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Buffett dismisses talk of Berkshire Railroad merger and CSX shares fall

Warren Buffett, the billionaire investor, shut down speculation on Monday that his company Berkshire Hathaway was looking to acquire another train company.

After Buffett said to CNBC that he wasn't interested in a merger - and shattered investor hopes that Berkshire Rail unit BNSF might acquire CSX - shares of CSX dropped about 5%. Later, a representative from Berkshire confirmed Buffett’s remarks.

Investors have been speculating for weeks that CSX Corp. and BNSF may merge. Last month, Union Pacific and Norfolk Southern announced a $85 billion surprise merger proposal. The goal was to create the U.S.'s first coast-tocoast freight rail operator.

Becky Quick of CNBC reported that Buffett met with the CEO CSX to discuss greater cooperation.

Berkshire reports that Buffett and Greg Abel had a meeting with CSX CEO Josephhinrichs on August 3 in Buffett’s Omaha office, without advisors. The two men told Hinrichs they wouldn't bid on CSX but that they believed they could work together more to gain the same benefits.

Last week, CSX announced new coast to coast services. This strengthened their freight connectivity, but also dampened market expectations about a merger.

BNSF and CSX didn't immediately respond to comments.

Investors are unhappy with CSX's performance, and the news puts pressure on CEO Joe Hinrichs.

Ancora Holdings has urged the board, after increasing its stake, to look at merger options with BNSF and Canadian Pacific Kansas City. They also warned that CSX is falling behind by waiting on Berkshire's first move. (Reporting from Sabrina Valle, in New York; Nathan Gomes, in Bengaluru, and editing by Shreya biswas, Alan Barona, and David Gregorio.)

(source: Reuters)