** Railroad operator CSX's shares surges 18 pct to $43.53 in heavy trading premarket, set to open at a record high
** CP Rail CEO Hunter Harrison to leave earlier than expected, and is in talks to team up with former Pershing Square partner Paul Hilal to shake up CSX, Reuters reports
** Hilal's fund Mantle Ridge LP said to have raised over $1 bln for investing in CSX, with Harrison seen playing a similar leadership role to help turn CSX around as he did at CP Rail, a source tells Reuters
** Other railroads gain, also on No.1 Union Pacific's better-than-expected Q4 report and optimism about 2017: Union Pacific up 3.6 pct, Kansas City Southern up 3 pct and Norfolk Southern up 5.6 pct
** Morgan Stanley says "given the potential activist interest, (CSX) is not likely to trade on fundamentals until a resolution," upgrades to 'equal-weight' from 'underweight'
** Scotiabank hikes rating to 'sector outperform', PT to $43 from $39 due to higher valuation on news of "potential take-out"
** About 8 mln CSX shares traded, making them most active stock premarket and already matching its 25-day moving avg
** Wall St split on CSX: 13 brokerages rate it 'buy' or higher and 13 'hold', with 3 'sell' ratings; median PT $39