ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, March 11, 1997 TAG: 9703110079
SECTION: EDITORIAL PAGE: A-6 EDITION: METRO
As co-purchaser of Conrail, Norfolk Southern gains access to big Northeast markets - and opportunities for new business.
THE JOINT purchase of Conrail by Norfolk Southern and CSX, and division of Conrail spoils to follow, is probably a victory for the Roanoke Valley and for NS. It's definitely a victory for shareholder democracy.
For Roanoke, the importance of the agreement, approved Friday by the Conrail board, lies in the fact that NS is a major employer here. Though less so than in the heyday of the Roanoke-based Norfolk & Western Railway, a predecessor of Norfolk-headquartered NS, the company's well-being is still important to the local economy.
The fortunes of Roanoke and NS, while linked, are not necessarily identical. Much could depend on just how Conrail's assets are divided. Encouragingly for Roanoke, Conrail's huge Altoona, Pa., shops apparently will go to CSX - which suggests that the NS shops in Roanoke will continue to hum.
For its share of the purchase price - one estimate is roughly $4 billion of the $10.5 billion total - NS will acquire routes enabling it to keep pace with CSX in expanding their respective reaches into the Northeast, where Conrail had held a near-monopoly. This will help keep NS competitive with the somewhat larger CSX; with Conrail's demise, NS and CSX will be the only major railroads east of the Mississippi River.
Initially, CSX had sought to purchase Conrail on its own. Though federal antitrust concerns would probably have forced some divestiture to NS, this way NS can negotiate for itself and not rely on the vagaries of regulators to ensure it stays competitive.
Conrail management had pushed for the unilateral CSX takeover; though the price wasn't as good as the NS offer, the CSX bid included job guarantees for top Conrail executives. But Conrail's stockholders, unconvinced, voted their interests rather than management's.
The stockholders won. The joint purchase has no job guarantees for Conrail executives - but it is at the higher price that NS had offered for Conrail stock.
LENGTH: Short : 44 linesby CNB