ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, November 22, 1996 TAG: 9611220066
SECTION: BUSINESS PAGE: A-10 EDITION: METRO
DATELINE: PHILADELPHIA
SOURCE: Associated Press
CSX Corp. completed the first stage of an $8.8 billion takeover of Conrail Inc. on Thursday after most stockholders tendered their shares, but the takeover brawl with Norfolk Southern Corp. is far from over.
The turnout for CSX's cash-and-stock offer doesn't reflect shareholder approval of that deal. Rather, shareholders who tendered stock want to make sure they get at least something, said analysts following the merger saga.
Norfolk Southern has made a $10 billion cash offer for Conrail but lost a court bid to stop CSX from proceeding with the first part of its cheaper deal. Norfolk Southern on Thursday extended its offer until midnight Dec. 16.
The struggle has attracted widespread attention as a test of whether a company can sell itself to a lower bidder. Regardless of who wins, the deal will be the biggest rail merger in history.
CSX only purchased 19.9 percent of Conrail under its multiple-step takeover plan. Shareholders who would rather accept Norfolk Southern's offer could still vote to block CSX from buying more stock.
Norfolk Southern's offer is worth $110 a share. CSX's offer is worth $110 a share on paper; but because it's a combination of cash and stock, the actual value is considerably less.
About 85 percent of Conrail's outstanding shares were tendered by the midnight Wednesday deadline, when the stock was worth $96.78. CSX will purchase 17,860,124 shares of the 76,629,202 tendered.
All shareholders who tendered shares will receive cash for 23 percent and stock for the rest.
The real fight comes in December when shareholders vote on whether to allow CSX to purchase another 20 percent of the company.
CSX and Conrail executives together will have just over 20 percent to vote. Conrail employees have another 10 percent and are likely to vote for merger, analysts said.
Support from shareholders with the swing 20 percent might be difficult to obtain, the analysts said.
``There are still a large amount of shareholders who are displeased with CSX's offer,'' said Carole Neely, a rail analyst at Brown Brothers Harriman & Co.
LENGTH: Short : 49 linesby CNB