THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, November 6, 1996 TAG: 9611060444
SECTION: FRONT PAGE: A2 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 54 lines
Norfolk Southern Corp. terminated discussions with CSX Corp. about the two railroads' competing bids to buy Conrail Inc., Norfolk Southern announced Tuesday.
The end of the talks came after Conrail's board met Tuesday afternoon to decide how to respond to Norfolk Southern's hostile takeover bid. Conrail is expected to announce its response today to the Norfolk-based railroad's $9.1 billion bid.
Philadelphia-based Conrail isn't expected to respond favorably to Norfolk Southern's bid, despite the fact that it tops the friendly merger proposal from CSX by $1 billion.
Norfolk Southern and Richmond-based CSX are competing for the title of largest railroad in the East, and for a competitive advantage over the other.
The two railroads began talking over the weekend in a move seen by some analysts as the first step toward a peaceful resolution of the bidding war. Norfolk Southern and CSX were expected to carve Conrail up, splitting lines and rail access.
``We reached an impasse in our trying to talk with CSX and are charging ahead with our $100 a share offer,'' said Robert Fort, a Norfolk Southern spokesman.
In a statement, Norfolk Southern Chairman David R. Goode said, ``Until CSX acknowledges that all Conrail shareholders are entitled to the $100 cash that they can only receive from Norfolk Southern's offer, any discussions between us are a waste of time.''
CSX officials could not be reached for comment late Tuesday.
Norfolk Southern also attacked the proposed merger of CSX and Conrail in a letter to Conrail shareholders and in a full-page advertisement in The Wall Street Journal Tuesday.
The advertisement, titled ``Act Now to Protect Your Investment,'' urges Conrail stockholders to vote for the merger in an upcoming shareholder election.
Conrail has scheduled a Nov. 14 shareholder meeting and vote on whether to give CSX the green light to proceed with its proposed friendly merger with Conrail.
``Norfolk Southern has offered $100 per share in cash for each of your Conrail shares,'' the ad states. ``This exceeds by more than $15 the blended value per share offered under the ill-advised agreement which Conrail has signed with CSX. . . . But you may not have the chance to accept this more valuable offer unless you vote NO. . . .''
Conrail and CSX are asking Conrail shareholders to vote to opt out of the ``fair value'' statute of Pennsylvania's tough anti-takeover law. The statute requires that anybody who buys 20 percent or more of a Pennsylvania company must give the remaining shareholders ``fair value'' for their stock.
At Tuesday's closing price of $44 a share for CSX stock, its cash and stock offer is worth about $86 a share to Conrail shareholders.
Both Conrail and CSX officials declined to comment on the advertisement. by CNB