Support of the proposed acquisition of the
Missouri-Kansas-Texas Railroad Co. by rail and energy giant Union
Pacific Corp., was approved Wednesday by the Oklahoma-Kansas-Texas
Rail Users Association.
Included in the purchase would be the Oklahoma, Kansas & Texas
Railroad Co., a wholly-owned subsidiary of Dallas-based
The agreement between Katy Industries - which owns 98 percent of
Missouri-Kansas-Texas Railroad - and Union Pacific is an estimated
$108 million transaction. It is scheduled to be filed with the
Interstate Commerce Commission on Nov. 14, for approval.
New York-based Union Pacific would buy all Missouri-Kansas-Texas
stock. Minority stockholders would receive cash and Katy Industries
would receive cash and securities, according to the merger plan.
Union Pacific plans to merge Missouri-Kansas-Texas with Union
Pacific Railroad Co. of Omaha, Neb., a subsidiary of Union Pacific.
Missouri-Kansas-Texas is a subsidiary of Katy Industries Inc. of
The effort to merge the two lines has been stymied twice since
talks first began because of beleagured Missouri-Kansas-Texas
Railroad's unsuccessful attempts to acquire by tender offer a total
of 60 percent of its registered certificates. The offer started at
$25 and rose to $39.75 in a third - and successful - attempt to bring
in the certificates, valued at about $10 million.
Proponents of the merger have said Union Pacific would lend some
of its financial strength to the railroad system in the
mid-southwest, and provide better access to additional markets.
Union Pacific had revenues of $3.78 billion in 1985 for its
transportation divisions alone, and net income of $322 million.
Missouri-Kansas-Texas had revenues of $264.79 million and net income
of $1.39 million in 1985.
The rail users association - in Oklahoma City to discuss the
merger at a special meeting - was formed in 1982 to represent
shippers along the line running from Salina, Kan., to Ft. Worth.
The portions of that line in Kansas and Texas were purchased by
Oklahoma, Kansas & Texas Railroad for $25 million, while the state of
Oklahoma acquired the portion of track within Oklahoma for $15
million from the trustee of the now-defunct Rock Island Railroad Co.
Oklahoma, Kansas & Texas Railroad is engaged in a lease-purchase
agreement with the state of Oklahoma for the line running through
The rail users raised $3 million in 1982 which was then loaned to
Missouri-Kansas-Texas for operating capital to get the former Rock
Island line operational.
The rail users association approved a resolution which:
- Authorized the officers of the association to tell Union
Pacific that the association will lend its active support to the
merger before the Interstate Commerce Commission, providing that
Union Pacific agrees in writing not to abandon any rail freight
service on the railroad lines represented by the association, without
the prior written consent of the association. …