-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LPptWNXzrH+vsE3zZWisVA1IWXXzRERtHlbvuCYyczLsLtnjCyFWKfB16DKubOZe 7dRE8XuA87s+WkwBgrFwog== 0000950172-96-000812.txt : 19961205 0000950172-96-000812.hdr.sgml : 19961205 ACCESSION NUMBER: 0000950172-96-000812 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19961204 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONRAIL INC CENTRAL INDEX KEY: 0000897732 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 232728514 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42777 FILM NUMBER: 96675813 BUSINESS ADDRESS: STREET 1: TWO COMMERCE SQ STREET 2: P O BOX 41417 CITY: PHILADELPHIA STATE: PA ZIP: 19101-1417 BUSINESS PHONE: 2152094434 MAIL ADDRESS: STREET 1: P.O. BOX 41429 STREET 2: 2001 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19101-1429 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NORFOLK SOUTHERN CORP CENTRAL INDEX KEY: 0000702165 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 521188014 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: THREE COMMERCIAL PL CITY: NORFOLK STATE: VA ZIP: 23510-2191 BUSINESS PHONE: 8046292680 SC 14D1/A 1 SCHEDULE 14D1 AMENDMENT NO. 14 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14D-1 (Amendment No. 14) Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 Conrail Inc. (Name of Subject Company) Norfolk Southern Corporation Atlantic Acquisition Corporation (Bidders) COMMON STOCK, PAR VALUE $1.00 PER SHARE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (Title of Class of Securities) 208368 10 0 (CUSIP Number of Class of Securities) SERIES A ESOP CONVERTIBLE JUNIOR PREFERRED STOCK, WITHOUT PAR VALUE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (Title of Class of Securities) NOT AVAILABLE (CUSIP Number of Class of Securities) JAMES C. BISHOP, JR. EXECUTIVE VICE PRESIDENT-LAW NORFOLK SOUTHERN CORPORATION THREE COMMERCIAL PLACE NORFOLK, VIRGINIA 23510-2191 TELEPHONE: (757) 629-2750 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) with a copy to RANDALL H. DOUD, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK, NEW YORK 10022 TELEPHONE: (212) 735-3000 This Amendment No. 14 amends the Tender Offer Statement on Schedule 14D-1 filed on October 24, 1996, as amended (the "Schedule 14D-1"), by Norfolk Southern Corporation, a Virginia corporation ("Parent"), and its wholly owned subsidiary, Atlantic Acquisition Corporation, a Pennsylvania corporation ("Purchaser"), relating to Purchaser's offer to purchase all outstanding shares of (i) Common Stock, par value $1.00 per share (the "Common Shares"), and (ii) Series A ESOP Convertible Junior Preferred Stock, without par value (the "ESOP Preferred Shares" and, together with the Common Shares, the "Shares"), of Conrail Inc. (the "Company"), including, in each case, the associated Common Stock Purchase Rights, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 24, 1996 (the "Offer to Purchase"), as amended and supplemented by the Supplement thereto, dated November 8, 1996 (the "Supplement"), and in the revised Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"). Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings given such terms in the Offer to Purchase, the Supplement or the Schedule 14D-1. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. Item 11 is hereby amended and supplemented by the following: (a)(48) Text of Advertisement appearing in newspapers commencing December 4, 1996. (a)(49) Text of Presentation made to certain shareholders of the Company commencing December 4, 1996. SIGNATURE After due inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 4, 1996 NORFOLK SOUTHERN CORPORATION By: /s/ JAMES C. BISHOP, JR. ---------------------------------- Name: James C. Bishop, Jr. Title: Executive Vice President-Law ATLANTIC ACQUISITION CORPORATION By: /s/ JAMES C. BISHOP, JR. ---------------------------------- Name: James C. Bishop, Jr. Title: Vice President and General Counsel EXHIBIT INDEX Exhibit Number Description Page ------- ----------- ---- (a)(48) Text of Advertisement appearing in newspapers commencing December 4, 1996. (a)(49) Text of Presentation made to certain shareholders of the Company commencing December 4, 1996. EX-99 2 EXHIBIT (A)(48) [ADVERTISEMENT] CSX/CONRAIL OVERLAPPING COMMUNITIES [Graphic: Box with map of Pennsylvania, Delaware, Mary- land, Ohio, and parts of West Virginia, Michigan, Indiana, and Illinois with names of cities with major rail service only from CSX and Conrail] WHERE WILL CONRAIL EMPLOYEES BE IF COMPETITION DIES? One look at this map shows why a combination with CSX isn't good for Conrail employees. The 60-plus communities on it are those with major rail service only from CSX and Conrail. Indeed, CSX and Conrail run parallel from Ohio to Philadelphia and elsewhere. At the same time, Conrail's major Hollidaysburg and Altoona shops are within just 70 miles of CSX's facilities at Cumberland, Md. Redundancies like these could add up to lost jobs. The sheer size of a CSX/Conrail combination would dominate rail transportation in the East, depriving shippers of the balanced competition that promotes safe and efficient service--service that encourages economic development and brings the marketplaces of the world to every shipper's doorstep. Lack of competition means lack of growth--lack of rail business, lack of train service, lack of maintenance: in short, fewer opportunities for employees. With this in mind, Conrail employees have every reason to support a combination with Norfolk Southern. Norfolk Southern's system extends and complements Conrail's system, rather than duplicating it. Conrail employees want to be part of a winning future. Norfolk Southern has the best employee safety record of any major carrier. The best operating ratio. A world-class infrastructure. A reputation for innovation and industrial development. It's why The Thoroughbred has been called one of America's most admired companies.1 Norfolk Southern and Conrail can both boast overfunded, healthy pension funds, ensuring peace of mind for retirees. CSX's claim to fame is its recent recognition as one of the "Top 50 Companies with the Largest Underfunded Pension Liability".2 CSX hasn't said much about these issues. It does not want to remind Conrail employees that your system overlaps CSX. It doesn't want to remind you that CSX/Conrail would create a virtual "no-competition zone" from eastern Ohio to the Atlantic. And it certainly doesn't want to remind you that Conrail's pension money could be merged with CSX's woefully underfunded pension fund. IT'S TIME TO ACT If you're a Conrail employee, take action. Let your board of directors, management, labor leaders and lawmakers know that you support jobs, growth, opportunity, competition and a healthy pension fund. If you own shares of Conrail, say NO to the CSX/Conrail deal by voting at the stockholders' meeting December 23. Vote your shares AGAINST Conrail's proposal to "opt out" of the fair value statute. If you are a participant in the Conrail ESOP, instruct the ESOP Trustee to vote your shares AGAINST the proposal. ESOP participants should know that their votes are especially important because each allocated share represents both a financial and voting interest by the participants equivalent to at least five shares. This is because allocated ESOP shares control the voting of both unallocated ESOP shares and Employee Benefits Trust shares. And remember--your vote is strictly confiden- tial. - -------- 1 FORTUNE, Annual Corporate Reputations Survey, March 4, 1996. 2 Pension Benefit Guaranty Corporation: News Release 96-16, December 6, 1995. Employees should also know that a number of senior Conrail executives have been selling Conrail shares not only pursuant to the CSX offer but also in the open market. Does this manifest a lack of confidence in the value and the chances of completion of CSX's proposed deal, which would have 75% of the remaining Conrail shares converted into CSX stock in the back-end merger? [NORFOLK SOUTHERN LOGO] The Thoroughbred of Transportation [Copyright] Norfolk Southern Corporation, Three Commercial Place, Norfolk, VA 23510-2191. http://www.nscorp.com EX-99 3 EXHIBIT (A)(49) [NORFOLK SOUTHERN LOGO] NORFOLK SOUTHERN CORPORATION SHAREHOLDER PRESENTATION NORFOLK SOUTHERN IS OFFERING CONRAIL SHAREHOLDERS SUPERIOR VALUE - -------------------------------------------------------------------------- ========================================================================== NORFOLK SOUTHERN OFFER CSX OFFER - -------------------------------------------------------------------------- o Nominal value of $110.00 per o Nominal value of $92.78 per share share(3) - -------------------------------------------------------------------------- o $8.0BN total value(4) o $6.7BN total value(2) - -------------------------------------------------------------------------- o No equity risk -- all cash o Equity risk -- no voting trust, 75% stock - -------------------------------------------------------------------------- o No regulatory risk -- voting o Regulatory risk for stock por- trust tion - -------------------------------------------------------------------------- o No synergy risk -- all cash o Synergy risk -- 75% stock - -------------------------------------------------------------------------- o Immediate value o Timing of back-end exchange uncertain ========================================================================== - ------------------ 3 Based on 25% cash/75% stock, reflects CSX 12/2 closing price of $46.875, represents discounts of 15.7% to Norfolk Southern offer 4 For remaining shares NORFOLK SOUTHERN'S OFFER IS ALSO SUPERIOR FOR OTHER CONSTITUENCIES - --------------------------------------------------------------------- EMPLOYEES Safety: Norfolk Southern has established itself as the safest railroad in terms of employee safety for the past seven years Better fit: Norfolk Southern's rail system has less overlap and duplications, providing greater opportunity for maintaining employment Pension funds: Norfolk Southern and Conrail have overfunded pension plans; CSX has an underfunded pension plan SHIPPERS Safety: Norfolk Southern has the lowest derailment ratio in the industry, resulting in superior service to customers Service: Norfolk Southern is the most efficient railroad, providing the highest level of service to its shippers Balanced competition: Norfolk Southern/Conrail would create a more balanced competitive landscape in the Eastern U.S. Innovation: Norfolk Southern created innovative ventures such as the Triple Crown Intermodal Network using RoadRailer [trademark symbol] technology CONRAIL'S BOARD CAN SATISFY THE REMAINING CONDITIONS TO NORFOLK SOUTHERN'S OFFER - -------------------------------------------------------------------------- Satisfied Condition Yes No Comment Voting trust approval x Satisfied 11/18 condition pursuant to informal nonbinding written opinion by STB HSR condition x Satisfied 11/18 pursuant to FTC Premerger Notification Office confirmation Financing condition x Satisfied 11/15; over $20.1 BN in commit- ments received Subchapter F condition x Conrail Board action required Rights condition x Conrail Board action required CSX termination condition x Conrail Board action required CSX'S OFFER -- MUCH LESS VALUE, REALLY HOSTILE TO SHAREHOLDERS - ------------------------------------------------------------------------ Much less value Really hostile Earliest o Hostile approach - coercive bid Structure Amount receipt date - ------------------------------------- o Hostile structure - multi-tier, 25% cash $110.00 Jan. 1997 front-end loaded 75% equity (1.85619 $87.01(1) Jan. 1998(?) o Hostile back-end -- uncertain timing shares) AND value on 75% of the bid BLENDED VALUE: $92.78 o Hostile vote -- 5:00 p.m. the night before Christmas Eve - -------------- 1 Based on CSX 12/2 closing price of $46.875 CSX'S OFFER NOW EXPOSES SHAREHOLDERS TO DOWNSIDE RISKS FOR 75% OF CONSIDERATION - ------------------------------------------------------------------------ o Regulatory risk -- STB does not approve transaction -- STB imposes conditions unacceptable to CSX and Conrail o Timing risks o Equity market risk o Synergy risk -- Synergy realization (gross number) -- Synergy realization (net number; STB "give-ups")
SIGNIFICANT REGULATORY RISK IS BORNE BY CONRAIL SHAREHOLDERS IN THE CSX PROPOSAL - ---------------------------------------------------------------------------------------------- "2-to-1" points comparison Cities with over 100,000 population NS/CR CSX/CR - ---------------------------------------------------------------------------------------------- General General merchandise merchandise Cities Population(1) sales(1)($000s) Cities Population(1) sales(1) ($000s) - ---------------------------------------------------------------------------------------------- Erie, PA 280,600 $396,696 Baltimore, MD 2,465,700 $2,442.491 Fort Wayne, IN 470,400 545,487 Dayton, OH 957,100 1,471,145 Grand Rapids, MI 990,400 1,738,886 Indianapolis, IN 1,473,300 1,937,260 Philadelphia, PA 4,958,300 4,551,065 Pittsburgh, PA 2,399,600 2,526,381 Youngstown, OH 603,600 797,138 TOTALS 751,000 $942,183 13,848,000 $15,464,366 "SHIPPERS, PORTS, AND CONGRESS OPPOSE CONRAIL SALE TO AN UNEXPECTED EXTENT . . . OPPOSITION IS LIKELY TO FORCE THE WINNING BIDDER INTO COSTLY CONCESSIONS, INCLUDING SELLING ASSETS AND ROUTES."
- -- The Wall Street Journal, November 27, 1996 1 Source: Rand McNally, Commercial Atlas & Marketing Guide, 127th edition CSX'S OFFER -- FAULTY SYNERGY MATHEMATICS - ------------------------------------------------------------------------ o EQUITY RISK: value of 75% stock is highly dependent on synergies realized o SYNERGY RISK: CSX (year 2000) NSC (year 2000) 1st time $550 million $660 million 2nd time $730 million $660 million 3rd time ? $660 million O STB RISK: -- Market share dominance in CSX-Conrail transaction -- Significant market overlap in CSX-Conrail transaction -- Need for balanced competition O Because we believe CSX must give up more track and revenue than NSC, it is unlikely to have more synergies -- CSX will have more losses from enhanced competition and therefore less net revenue enhancements -- CSX will have less track and revenue remaining and therefore less operating savings opportunities CSX'S OFFER EXPOSES SHAREHOLDERS TO DOWNSIDE RISKS WITH SIGNIFICANT VALUE IMPLICATIONS ON BACKEND - ------------------------------------------------------------------------ NO COMPLETION OF BACK-END EQUITY MARKET RISK Back-end value $71.00 Back-end value $73.96 Discount to NS (35.0%) Discount to NS (32.8%) all cash offer all cash offer ASSUMPTIONS ASSUMPTIONS o CRR reverts back to pre-CSX o Equity market (including CSX) announcement price of $71.00 drops 15% before completion of back-end exchange o STB fails to approve or approves on terms unacceptable to CSX YOU MUST VOTE "NO" ON OPT-OUT TO PROTECT THE VALUE OF YOUR SHARES - ------------------------------------------------------------------------ NO VOTE o Helps secure higher value for shares o Sends important signal on shareholder rights o Helps NS win -- More immediate value -- No up-front risk -- No back-end risk -- Superior transportation system -- Superior equity investment opportunity YES VOTE o CSX wins despite -- Delivering inferior value -- Loading substantial risk on shareholders -- Using coercive structure to squeeze out owners at a lower price Every vote counts - To realize the benefits available you must vote against opt-out -----END PRIVACY-ENHANCED MESSAGE-----