ROANOKE TIMES Copyright (c) 1997, Roanoke Times DATE: Thursday, February 13, 1997 TAG: 9702130035 SECTION: BUSINESS PAGE: B-6 EDITION: METRO DATELINE: NORFOLK SOURCE: Bloomberg News
Norfolk Southern Corp. said Wednesday it has begun another tender offer for Conrail stock, this time trying to acquire the 90.1 percent of the company's common shares it doesn't already own.
Before hostile bidder NS can actually buy additional shares, however, it must find a way to defeat Conrail's ``poison pill'' defenses, which are designed to make a hostile acquisition prohibitively expensive.
NS and CSX Corp. are battling for control of Conrail, the Philadelphia-based railroad prized for its dominance of freight traffic in the Northeast.
CSX has agreed to buy Conrail for $9.43 billion in cash and stock. Norfolk Southern has offered $115 a share, or $10.32 billion.
NS said Wednesday it intends to ``consummate a merger'' if enough Conrail shares are tendered by the offer's deadline of midnight March12.
Conrail's anti-takeover defenses are triggered if NS buys more than the 9.9 percent of Conrail stock it acquired in a previous tender offer. The defenses include flooding the market with new Conrail shares and a required $300 million breakup fee to CSX. NS already has lost a lawsuit that sought to repeal those provisions.
NS could hold any additional shares won in its latest tender offer in a trust without triggering the poison pill provisions and then hope to buy them at a later date, said Bob Fort, NS spokesman.
``Norfolk will be careful not to trigger the poison pills,'' said Ann Yerger, research director at the Council of Institutional Investors, which represents about 100 pension funds. ``They know once they step over the 9.9 percent line, it wouldn't be pretty.''
Further complicating Norfolk Southern's bid is CSX's ownership of 19.9 percent of Conrail's shares.
The new tender offer is Norfolk Southern's second move this week to gain control of Conrail. On Monday, NS launched a proxy fight to gain control of Conrail's board of directors. The company proposes replacing all but three of Conrail's 13 directors and reducing the board to eight members.
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