ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, October 29, 1996 TAG: 9610290079
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: PHILADELPHIA
SOURCE: Associated Press
CALLING NORFOLK SOUTHERN "a spurned suitor," Conrail said its board's actions were legal.
Conrail asked a federal judge Monday to throw out a Norfolk Southern Corp. lawsuit seeking to block Conrail's merger with CSX, calling the suit ``absurd'' and ``based on frustrations and spite.''
Norfolk Southern sued Conrail, CSX and the Conrail board last week, asking for an injunction against a Nov. 14 special meeting of Conrail shareholders. A proposal to be introduced at that meeting would allow CSX to acquire 40 percent of Conrail stock.
Conrail and CSX announced their proposed merger Oct. 15 - to Norfolk Southern's ``surprise and dismay,'' according to the lawsuit.
The company contended that Conrail and CSX were trying to ``fraudulently manipulate Conrail's shareholders to swiftly deliver control of Conrail to CSX and to forestall any competing higher bid for Conrail.''
Conrail more than matched Norfolk Southern's sharply worded lawsuit.
``As a spurned suitor, Norfolk Southern Corp. brings this ill-conceived and defective suit in an attempt to have this court second-guess the judgment of the board of directors of Conrail Inc.,'' Conrail said in supporting document.
Conrail called Norfolk Southern's request for emergency relief on behalf of Conrail shareholders a ``pretext.''
``Norfolk Southern's motivation, however, as proclaimed by its hostile tender offer is clear; it seeks not to benefit Conrail shareholders but to swallow Conrail and acquire for its own benefit Conrail's routes and assets,'' Conrail said.
The CSX bid to buy Conrail is a cash-and-stock mix that was initially worth $8.4 billion. But after its stock price fell, the CSX offer declined in value to around $8.02 billion.
Norfolk Southern, which has been pursuing Conrail since 1984, made a hostile bid of $9.15 billion in cash to Conrail shareholders, topping the CSX offer by $1 billion.
U.S. District Judge Donald VanArtsdalen scheduled a Nov. 12 hearing on Norfolk Southern's request.
Norfolk Southern also has asked the court to dissolve Conrail's so-called ``poison pill'' plan against hostile takeovers and delay CSX's tender offer.
Conrail argued in its motion that actions taken by its board were permitted by Pennsylvania law and that Norfolk Southern's interest in acquiring Conrail at the lowest possible price was ``antagonistic'' to the interests of Conrail shareholders.
LENGTH: Medium: 54 linesby CNB