DATE: Tuesday, August 19, 1997 TAG: 9708190221 SECTION: BUSINESS PAGE: D1 EDITION: FINAL SOURCE: STAFF AND WIRE REPORT LENGTH: 44 lines
A $55 million offer by Norfolk Southern Corp. and CSX Corp. to buy Delaware Otsego Corp. and its New York Susquehanna and Western Railway was accepted, officials said Monday.
As Norfolk Southern and CSX proceed with their plan to divide Conrail, the Delaware Otsego deal helps consolidate the rail giants' grip on access to the New York metropolitan area. It also keeps two big Canadian railroads - Canadian National Railway Co. and CP Rail - from gaining greater access to New York.
Norfolk Southern and CSX are forming a new company for the acquisition. Delaware Otsego's president and chief executive officer, Walter G. Rich, will retain his position after the deal closes in September. The firm will remain headquartered in Cooperstown, N.Y.
Rich owns a 14 percent stake in Delaware Otsego. Richmond-based CSX owns 6 percent of the company.
Delaware Otsego owns the New York Susquehanna and Western Railway, known as the Susie Q. Delaware Otsego operates a 500-mile rail line that provides freight service through New York, New Jersey and Pennsylvania. Its holdings include the only route into the New York market that isn't owned by Conrail.
The original offer was $19 for each outstanding share, but the sale price increased to $22 a share and was approved by Delaware Otsego's board of directors, the company said.
``This merger culminates three decades of work that Walter Rich and his team have put into building the company from the ground up into a respected regional railroad in the Northeast,'' said Everett Gilmore, chairman of Delaware Otsego's board. ``This transaction will provide great value and liquidity to our shareholders. . . .''
Frank Brown, a Norfolk Southern spokesman, said Delaware Otsego will continue to operate separately from the Virginia railroads.
``This allows them to make changes in their facilities and services so that they can respond in the way they see fit to changes in traffic patterns that could result from the Conrail takeover,'' he said.
Rivals Norfolk Southern and CSX are splitting Philadelphia-based Conrail in a compromise reached in April after a six-month takeover battle. Federal approval of the deal is still needed.
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