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Norfolk bids for Conrail
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October 23, 1996: 9:45 a.m. ET
Company makes unsolicited offer to derail earlier deal with CSX
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NEW YORK (CNNfn) -- Norfolk Southern Corp. on Wednesday launched a $9.5 billion hostile bid to acquire Conrail Inc. for $100 in cash per share, topping a friendly $92.50 cash and stock offer made last week by rival CSX Corp.
Norfolk said its offer, which includes a $500 million break-up fee, represented an $11.49 per share cash premium over the blended cash and stock offer CSX made. Chairman and Chief Executive Officer David R. Goode added that the proposed acquisition would also hold a more promising future for Conrail, allowing the company to benefit from streamlined efficiency and a combined rail system.
"This proposal is better on every point than the CSX/Conrail proposal," Goode said. "A combined Norfolk Southern-Conrail will create a more balanced eastern rail system and will do so by increasing, rather than diminishing, competition in the industry."
In an open letter to Conrail shareholders, Goode said his company tried for several years to interest Conrail in a merger. Each time, he said, Conrail Chairman David M. LeVan rejected the overtures.
Analysts had expected Norfolk to make a move in opposition to the merger agreement reached between CSX and Conrail. Norfolk criticized the agreement as a threat to fair trade and competition in the consolidating rail industry.
Neither CSX nor Conrail had any immediate response to the offer. Under their agreement, CSX would pay $92.50 per share in cash and stock to Conrail shareholders, with 40 percent of the money coming in cash and 60 percent in stock. CSX and Conrail termed their $8.4 billion agreement as a merger of equals, creating new positions for senior executives from the two companies.
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