Activist investor Ancora Holdings told railroad operator CSX it should pursue a deal with a rival or replace its chief executive if it doesn’t, according to a letter reviewed by The Wall Street Journal. The hedge fund said it is prepared to launch a proxy fight for board seats later this year if CSX doesn’t heed its advice.

The operator of some 20,000 miles of track faces extra pressure following a recent merger announcement from rivals.

Ancora's letter, sent privately to the board of CSX on August 6, comes as Union Pacific has signaled its intent to acquire smaller rival Norfolk Southern in an $85 billion deal that would create the first U.S. coast-to-coast freight railroad and reshape the movement of goods and grain nationwide.