ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 12, 1996 TAG: 9612120055
SECTION: BUSINESS PAGE: B-10 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
CSX Corp. and Conrail Inc. said Wednesday they'll ensure customers will have a choice of rail carriers, even after a proposed merger that would give the combined railroad a virtual monopoly on some routes.
The two railroads said their efforts will bring "even more competitive benefits to customers who will be served by their merged railroad." The pair said they would meet with other railroads interested in serving customers in their merger territory.
Norfolk Southern Corp. launched a hostile bid for Philadelphia-based Conrail after Conrail and CSX of Richmond announced their merger plans Oct. 15. Norfolk Southern has argued that an NS-Conrail merger would be better for rail competition in the Northeast because NS has fewer tracks duplicating Conrail's than does CSX.
CSX and Norfolk Southern are both interested in acquiring Conrail because of its dominant position in the populous and lucrative Northeastern markets. Conrail is the only major railroad serving New York City's ports.
If Norfolk-based NS, which has more than 3,000 workers in the Roanoke Valley, loses the battle for Conrail, it may find itself at a competitive disadvantage in its Eastern markets, where CSX already is a formidable competitor.
Norfolk Southern on Wednesday offered Conrail's board of directors a written agreement that NS will not be a party to any deal with CSX or Conrail that gives Conrail's shareholders less than $110 per share for all of their stock.
That's in contrast to the CSX merger agreement with Conrail. CSX has offered $110 per share for 40 percent of Conrail's shares and 1.856 shares of CSX stock - worth $85.14 at the market's close Wednesday - for each of the remaining Conrail shares.
NS also said Wednesday that it was extending its $110 per share cash offer for Conrail stock until midnight on Jan. 10. So far, NS said it has received commitments of roughly 2.4 million shares from Conrail shareholders or 2.7 percent of the company's stock.
CSX has already bought 17.9 million shares or 19.9 percent of Conrail stock. And Conrail has a shareholders' vote scheduled for Dec. 23 on whether CSX should be exempted from an Pennsylvania anti-takeover law and allowed to complete the remainder of its cash offer for another 21.1 percent of Conrail.
CSX called the NS offer to formalize its $110 per share all-cash offer a "non-event" and a "smokes creen intended to cloud reality." CSX said NS can't close its tender offer for Conrail stock because in its merger agreement with Conrail, which has been upheld in federal court, the Conrail board can't consider a competing offer until the next summer.
LENGTH: Medium: 54 linesby CNB