ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, June 6, 1996 TAG: 9606060097
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: SAN FRANCISCO
SOURCE: Associated Press
Conrail Inc. on Wednesday raised its bid by almost 27 percent for the rights to some key rail routes from the Southern Pacific Transportation Co., which is trying to merge with Union Pacific.
Conrail upped to $1.9 billion its offer for the Eastern lines belonging to the subsidiary of Southern Pacific Rail Corp. It had offered $1.5 billion in September.
Southern Pacific said the offer still was inadequate. Union Pacific Corp. spokesman Harvey Turner declined to comment.
The proposal was made to Union Pacific, which is facing mounting federal opposition to its $5.4 billion attempt to acquire Southern Pacific and create the nation's largest railroad.
``We believe that our offer will turn out to be the best deal for Union Pacific shareholders,'' Conrail Chairman David LeVan said Wednesday. ``It not only fixes the anti-competitive problems in the East, it also does it for a fair price.''
The Department of Justice on Monday asked the Surface Transportation Board, which has responsibility for deciding the Southern Pacific-Union Pacific merger, to deny it outright, because the deal, without extensive divestitures, would hurt consumers, farmers and exporters.
Union Pacific has claimed that, with more than 35,000 miles of track, the combined railroad would save more than $750 million annually and improve western freight service.
Conrail said its offer will solve some of the anti-competitive concerns by taking key routes away from Southern and Union Pacific.
It seeks Southern Pacific's lines from Chicago, through St. Louis and Memphis, Tenn., to Houston, between Houston and New Orleans, and throughout Texas, Louisiana and Arkansas.
But Southern Pacific spokesman Mike Furtney said Conrail's offer is still too low.
``We don't feel that what they had offered initially was anything like the value of that property. And this is not a substantial increase,'' he said. He would not specify what price Southern and Union Pacific would accept.
Conrail, with corporate headquarters in Philadelphia, operates an 11,000-mile rail freight network in 12 Northeastern and Midwestern states, the District of Columbia, and the Province of Quebec.
The deal was announced at the close of trading on the New York Stock Exchange, where Conrail finished up 621/2 cents at $70.75 a share, Southern Pacific gained 25 cents to $23.621/2 and Union Pacific rose $1.25 to $72.25.
LENGTH: Medium: 53 linesby CNB