ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Friday, March 28, 1997 TAG: 9703280057
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NORFOLK
SOURCE: BLOOMBERG NEWS
As the talks proceed, the division of Conrail appears to be headed toward a 60-40 split.
Norfolk Southern Corp. is negotiating with CSX Corp. to buy as much as 60 percent of Conrail Inc.'s assets, which would require NS to pay $525 million more than originally expected, according to a source close to the negotiations.
This month, CSX agreed to buy Conrail for $10.5 billion and split the Philadelphia-based railroad's assets with NS, creating two transportation giants that would dominate freight shipping in the East.
NS had been expected to acquire about 55 percent of Conrail in the split, but the agreement has been honed in recent days to give NS a greater share of the railroad's assets, the person said. As a result, NS could end up paying about $6.3 billion for its share, with CSX paying about $4.2 billion.
Negotiators for CSX and NS are meeting in Charleston, S.C., to hammer out the final details of the agreement, which is expected to be announced in the next week.
Analysts and shareholders said they weren't surprised by the shift, because NS has more cash than CSX and its rail system is more compatible with Conrail's.
``Norfolk Southern's tracks don't overlap as much with Conrail's as CSX's do, so they'll be able to take more assets without causing problems,'' said Peter Gleason, a senior research analyst at Institutional Shareholder Services, which advises some of Conrail's largest shareholders. ``And Norfolk has always been willing to pay more.''
NS spokesman Bob Fort declined to comment on the negotiations. While most of the major issues have been resolved, ``there are little things that are still being worked out,'' he said.
CSX and hostile bidder NS spent months fighting for control of Conrail before agreeing in January to sit down and negotiate.
Under the agreement being negotiated, both NS and CSX would gain access to New York and New Jersey ports, through which billions of dollars of freight move each year, the person familiar with the negotiations said. Further, Conrail's two main lines that run east from Chicago and St. Louis would be divided between the two, the person said.
CSX would get the Conrail line that runs to Boston from St. Louis, while NS would acquire the line that runs from Chicago to Pittsburgh and Philadelphia, the source said.
Any agreement would require approval by shareholders of all three companies, as well as by the U.S. Surface Transportation Board, which regulates the railroad industry.
LENGTH: Medium: 62 lines ILLUSTRATION: PHOTO: WAYNE DEEL THE ROANOKE TIMES. An eastbound Norfolkby CNBSouthern coal train pulls out of the south yards in Roanoke on
Thursday. NS is expected to acquire the line that runs from Chicago
to Pittsburgh and Philadelphia and would gain access to New York and
New Jersey ports, under the agreement being negotiated. color.