Norfolk Southern loses appeal in Conrail deal U.S. court says purchase by CSX can't be blocked

November 21, 1996|By BLOOMBERG BUSINESS NEWS

PHILADELPHIA -- Norfolk Southern Corp. lost its appeal of a court ruling that said the company can't block CSX Corp. from acquiring Conrail Inc. for $8.5 billion. Three judges at the U.S. 3rd Circuit Court of Appeals in Philadelphia issued the ruling yesterday.

Tuesday, a U.S. District Court judge in Philadelphia ruled that CSX could go forward with its $8.5 billion acquisition of Conrail, dealing a major setback to Norfolk Southern's $10 billion hostile bid.

The appellate panel's denial of Norfolk Southern's appeal sets -- the stage for CSX to win the 19.9 percent of Conrail's shares it says it needs to proceed with the merger. CSX's tender offer for Conrail shares expired last night.

Even before the ruling, Conrail shareholders doubted Norfolk Southern could win the appeal.

Now, Norfolk Southern's only hope of capturing Conrail is to convince shareholders not to opt out of a Pennsylvania law that prevents Conrail from accepting CSX's two-tiered bid. That vote, scheduled for mid-December, likely will be the pivotal decision in the battle for Conrail.

CSX is offering $110 a share for the first 40 percent of Conrail, and 1.856 CSX shares for the rest, or $84.25 a share, based on Tuesday's closing stock price. Norfolk Southern has offered $110 a share in cash for the whole company. Conrail shares closed up 50 cents yesterday to $96.875. CSX shares closed up $1.625 to $47; Norfolk Southern's was down $1 to $88.

Pub Date: 11/21/96

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