Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 22, 1990 TAG: 9003222662
SECTION: VIRGINIA PAGE: B7 EDITION: EVENING
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
Wilder, however, denied Wednesday that his role surrounding the scrapped merger of the two railroad-commercial real estate companies had political motives.
"I think he took a populist stand, and I think it's bound to increase his popularity," University of Virginia political science professor Larry Sabato said. "It was a stand that has strong appeal to the average guy who is suspicious of the big deals reached in some smoke-filled rooms."
Wilder raised questions about whether the $385 million deal announced Feb. 20 may have undervalued RF&P property, but he said he did not oppose the merger.
CSX said its offer to pay $34.50 a share for RF&P stock or exchange it for CSX shares on a 1-for-1 basis was based on the belief that the RF&P board of directors and the directors of the Virginia Supplemental Retirement System supported the merger. The state owns 20 percent of RF&P through the retirement system.
Less than a week after the deal was announced, Wilder forced Charles Walker, chairman of the system, to resign and replaced him with Jacqueline Epps, a close confidante of the governor. Walker also was an RF&P board member who supported the merger.
On March 15, at the first retirement system board meeting with Epps in charge, the board fired two veteran legislators - Senate Majority Leader Hunter Andrews of Hampton and Del. Robert Ball Sr., D-Henrico - as its representatives on the RF&P board.
Wilder had said both Andrews and Ball met with him privately to seek legislation ratifying the merger. General Assembly approval would have been necessary for the sale of the state's RF&P stock.
Andrews and Ball said they were merely keeping the governor informed.
"Basically, the removal of the two RF&P directors was the key factor for us," Mark Aron, CSX's senior vice president for law and public affairs, said of his company's decision Tuesday to drop the proposed merger.
Wilder argued that the deal needed closer study after a number of analysts said CSX had undervalued RF&P's real estate holdings, particularly the 320-acre Potomac Yard in Northern Virginia. Some analysts said the Potomac Yard alone was worth twice the amount of the $385 million merger and that RF&P stock was worth up to $60 a share. CSX officials refused to raise the bid.
Wilder defended his actions, saying such deals would not occur in the future without the taxpayers being fully informed.
"It's not a question of vindication. It's not a question of victory. It's not a question of winning," he said. "It's a question of the integrity of the process and I think that has been improved upon."
Ball, however, was critical of the governor. "It was not good business judgment in the way this was handled by the governor's office," he said.
In seeking to pull out of the deal pending approval of the RF&P board, CSX left open the possibility of increasing its already considerable stake - which includes 61 percent of the common stock - in the smaller company.
CSX also suggested that potential buyers willing to pay more than $34.50 a share for RF&P shares would be welcome.
CSX operates 19,000 miles of track in 20 states, the District of Columbia and Ontario, Canada. RF&P operates 113 miles of track between Richmond and the Northern Virginia suburbs of Washington, D.C.
The companies, both based in Richmond, also have extensive dealings in commercial real estate, including a number of joint ventures.
by CNB