ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Thursday, October 31, 1996             TAG: 9610310017
SECTION: EDITORIAL                PAGE: A10  EDITION: METRO 

A BETTER DEAL FOR CONRAIL?

NORFOLK Southern Corp. last week put in an offer to acquire Conrail, the Northeast-centered railroad. The NS offer came as a counter to a proposed merger agreed to and announced a few days earlier by the managements of Conrail and CSX Corp.

View a map of what a combined NS-Conrail rail system would look like, and you see Roanoke at the heart of the network. While no guarantee that Roanoke would hold its place as a rail-employment center, geography suggests so. That's reason enough for Roanokers to prefer an NS-Conrail to a CSX-Conrail combination.

But what about the wider public? Is more at stake than the interests of private corporations, their managements and their stockholders? Is an NS-Conrail deal preferable to the CSX-Conrail merger for other than parochial reasons?

A few points to ponder:

* An NS-Conrail combination would control 60 percent of the Eastern freight market. A CSX-Conrail combination would control 70 percent.

* According to The Wall Street Journal, CSX isn't regarded as poorly managed, but NS is considered the best in the business, on the basis of such criteria as financial health, efficiency and physical condition of its tracks.

* NS is offering $9.1 billion, cash up front, for Conrail. CSX is offering about $8 billion, 60 percent of which would be paid to Conrail shareholders in CSX stock.

* CSX has promised to give the company a new name, to headquarter it in Conrail's Philadelphia rather than CSX's Richmond, and to make David LeVan, Conrail's chairman and chief executive officer, chief of the holding company after two years and of the rail division after completion of the merger. NS has said only that it is prepared to consider Philadelphia as a headquarters site and to discuss LeVan's future.

In other words, an NS-Conrail combination appears to rely for its success a bit less than would a CSX-Conrail combination on market dominance, and a bit more on competitive efficiency. NS appears to be offering Conrail stockholders somewhat more than does CSX, and Conrail's top management somewhat less. More than Roanoke's self-interest argues in favor of NS.

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