THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, October 19, 1996 TAG: 9610190242
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 43 lines
Norfolk Southern Corp.'s chief spokesperson said Friday that the Norfolk-based railroad will likely oppose the merger of CSX Corp. and Conrail Inc.
The railroad has not taken a formal position yet, but Magda Ratajski, Norfolk Southern's vice president of corporate communications, told the Journal of Commerce, a transportation industry newspaper, that the railroad has no reason to support it.
``We have no choice but to oppose it,'' Ratajski is quoted as saying in Friday's Journal of Commerce. ``This is a very, very serious situation where there would be 70 percent of rail freight moving on one railroad east of the Mississippi River.''
Reached Friday, Ratajski declined to elaborate.
Exactly how the railroad will respond to the merger is unclear. Its only formal statement on the merger is that whatever happens in the merger, Norfolk Southern will be a part of it.
Analysts say Norfolk Southern has several options:
Try to buy Conrail itself with a higher bid.
Challenge the merger when CSX and Conrail seek regulatory approval.
Negotiate trackage rates or even route purchases.
Merge with another railroad.
The railroad's only official response so far has been that it's not ruling out any option.
``Norfolk Southern doesn't have much time,'' said Anthony Hatch, who follows the rail industry for New York's NatWest Securities Corp.
CSX is making a tender offer for 19.9 percent of Conrail's stock that should start in November.
Under a Pennsylvania anti-takeover law, a company from outside the state cannot buy more than 20 percent of a Pennsylvania company without the company's shareholders voting to waive the statute.
The merger agreement is written so that another bidder would have to pay a $300 million break-up fee, Hatch said. It includes a variety of other measures to make it difficult for another bidder.
``It's going to be especially difficult to break this thing up,'' Hatch said. by CNB