ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, December 18, 1996 TAG: 9612180043
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Bloomberg Business News
Conrail Inc. must hold its scheduled meeting Monday and allow shareholders to decide whether CSX Corp.'s $8.45 billion bid for the rail company should proceed, a federal judge ruled Tuesday.
The ruling is likely to pressure CSX to sweeten its offer to win more votes, said shareholders and consultants tracking the bidding war. Norfolk Southern Corp., a rival suitor which has made a $10 billion cash bid, believes the measures won't pass and had asked the court to keep Conrail from delaying the meeting. Conrail had said it might delay the vote until it was certain of victory.
A postponement would be ``fundamentally unfair to shareholders,'' U.S. District Judge Donald VanArtsdalen said in granting the injunction.
Conrail shareholders are scheduled to vote on whether to allow their Philadelphia-based railroad company and CSX to ignore a Pennsylvania law that forbids two-step bids like the one CSX has offered. Conrail has said it prefers CSX's $8.41 billion cash and stock bid to Norfolk Southern's higher all-cash offer. ``We'll have a vote now, and that is the clearest way to see how shareholders are thinking,'' said Ed Cowart, manager of Banc One Investment Management's One Group large-company value fund.
Conrail shares rose $1.75 to close at $98.12 1/2. CSX rose 37 1/2 cents to $45, and Norfolk Southern shares fell 50 cents to $85 a share.
The judge's ruling also prevents Conrail from adjourning the meeting and continuing it later to gain time to build support. It doesn't bar Conrail officials from calling for another vote later if Monday's vote doesn't go their way. Cowart, whose One Group fund owns 75,000 Conrail shares, said he plans to vote against the proposal to ignore the Pennsylvania law, meaning CSX couldn't proceed with its bid as it exists today. The fund already tendered 23 percent of its Conrail holdings to CSX for $110 a share in the first part of CSX's two-tiered offer.
Conrail and CSX officials couldn't be reached immediately for comment.
CSX is offering $110 a share in cash for the first 40 percent of Conrail and 1.85619 CSX shares - worth $83.53 based on today's closing price - for each remaining Conrail share. It has already tendered 19.9 percent of the shares. Norfolk Southern is offering $110 cash for each share of Conrail.
LENGTH: Short : 47 linesby CNB