Newspaper article The Florida Times Union

Finally, CSX Gets Conrail Jacksonville Keeps Rail Headquarters

Newspaper article The Florida Times Union

Finally, CSX Gets Conrail Jacksonville Keeps Rail Headquarters

Article excerpt

It wasn't the deal they wanted, but the Conrail Corp. board

members yesterday accepted the inevitable and agreed to a $10.5

billion sale to CSX Corp., paving the way for the breakup of the

Philadelphia-based railroad.

The agreement, announced last night, ensures that Jacksonville

will stay the headquarters for CSX's rail unit, CSX

Transportation, company spokesman Tom Hoppin said. CSX employs

6,000 workers in Jacksonville.

Under the previous "merger of equals" agreement, Jacksonville's

role was unclear because Conrail Chairman and Chief Executive

Officer David LeVan was going to become president of the rail

unit. Now Pete Carpenter, chief executive of CSX Transportation

in Jacksonville, will continue in the post, Hoppin said.

CSX, which is paying about $2 billion more than it offered four

months ago, now will negotiate the sale of half of Conrail's

routes to rival Norfolk Southern Corp.

"Conrail's board and management would have preferred for the

Conrail system to remain intact," LeVan said. "However, under

the circumstances as they developed, we have succeeded in

negotiating the best possible transaction for all of Conrail's

constituencies."

CSX will pay Conrail shareholders $115 a share in cash no later

than June 17. CSX will place all of the shares in a voting trust

pending regulatory approval.

On Monday, Conrail directors voted to end the four-month,

multibillion-dollar merger battle among Conrail, CSX and Norfolk

Southern, the three largest railroads in the East.

CSX initially offered $8.4 billion, or $92.13 per share, but

most recently had offered $110 per share.

Conrail had been pushing for CSX's lower-priced offer to keep

the company intact. CSX had promised to keep the new company

headquartered in Philadelphia and elevate LaVan to the top job

in two years.

Conrail shareholders soundly blocked the CSX takeover deal on

Jan. 17.

Shareholders weren't alone in questioning the friendly merger

between CSX and Conrail. Federal regulators and railroad

customers voiced concern that the merger would hurt rail

competition on the East Coast. …

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