Newspaper article The Florida Times Union

CSX Merger May Face Conditions

Newspaper article The Florida Times Union

CSX Merger May Face Conditions

Article excerpt

While many railroad industry analysts expect federal regulators

to approve CSX's bid to buy a portion of Conrail after hearings

today and Thursday in Washington, some wonder whether regulators

will attach burdensome conditions to the deal.

The Surface Transportation Board's decision, which will be

announced Monday, could allow CSX and Norfolk Southern to buy

Conrail in a $10.2 billion transaction, the largest in railroad

history, and then divide it.

"We don't expect any problems and we believe the outcome of

that conference will be the approval to split Conrail," said

Jane Covington, a spokeswoman for CSX Transportation, the

Jacksonville-based railroad unit of the Richmond, Va., holding

company.

Yet the STB may attach rigorous conditions to its approval in

order to avoid the service problems that afflicted western

railroads after Union Pacific bought Southern Pacific last year,

according to Edward Emmett, president of the National Industrial

Transportation League, the nation's largest shipper's

organization.

"The STB might give the railroads a relatively bad time because

after the Union Pacific fiasco the board does not want to appear

as a pro-railroad agency," said Robert Banks, a transportation

economist in Washington, D.C.

The STB could dictate "costly and annoying" rules about safety

issues, freight rates and how CSX and Norfolk Southern must

share their tracks with passenger trains, according to Banks.

The threat of greater government scrutiny and regulation of CSX

and Norfolk Southern has weakened Wall Street's initial

enthusiasm over the Conrail acquisition.

CSXT officials have noted that it may take several years longer

than anticipated to achieve the savings that they expect to

wring out of the transaction. …

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