DATE: Tuesday, May 6, 1997                  TAG: 9705060292

SECTION: BUSINESS                PAGE: D2   EDITION: FINAL 

SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER 

                                            LENGTH:   38 lines

FLA. RAILROAD'S TAKEOVER OFFER FELT IN NORFOLK

A Florida railroad that is Norfolk Southern Corp.'s partner in the Sunshine State has received a takeover offer.

St. Joe Corp. has offered to buy for $428.4 million the 46 percent of Florida East Coast Industries Inc. that it doesn't already own.

Jacksonville, Fla.-based St. Joe is mostly interested in Florida East Coast's real estate holdings. Florida East Coast also owns a 442-mile railroad from Jacksonville to Miami that has been Norfolk Southern's partner in Florida service for some time.

``Our operations south of Jacksonville are inextricably linked with the Florida East Coast Railroad and we're very interested in whatever happens to it,'' said Robert Fort, a Norfolk Southern spokesman.

Norfolk Southern was rumored to be preparing a bid for the railroad in February 1996, when St. Joe made an offer to buy just Florida East Coast's real estate unit.

Nothing ever came of the rumors, and Norfolk-based Norfolk Southern has since gone after a much bigger fish. In April it agreed to split Conrail Inc. with CSX Corp. in a $10.2 billion deal.

It's Norfolk Southern's policy not to comment on takeover speculation, Fort said in reference to Florida East Coast.

St. Joe's plans for the small railroad could not be determined. The one-time paper company is making itself over as a real estate developer. The company could not be reached for comment.

Florida East Coast Industries has appointed a special independent board of directors to review St. Joe's offer.

The $102-a-share bid drove Florida East Coast's stock as as $108.50 a share in New York Stock Exchange Trading on Monday. It closed at $107.83 a share, up $19.12 for the day.

The higher trading price may indicate the market expects a higher offer for the company.

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