-----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, GnKHsp93PKklU8+n+aqqAXDNIbmVaYIHzdtoMtqaE/uekt7D3GxaIg5WL4l8ErBo 0zOuvWmiroAnoz7O36zF5Q== 0000950172-97-000185.txt : 19970305 0000950172-97-000185.hdr.sgml : 19970305 ACCESSION NUMBER: 0000950172-97-000185 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970304 SROS: NYSE GROUP MEMBERS: ATLANTIC ACQUISITION CORPORATION GROUP MEMBERS: NORFOLK SOUTHERN CORP 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 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42777 FILM NUMBER: 97550466 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 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: 97550467 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 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. 4 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14D-1 (Amendment No. 4) Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 and SCHEDULE 13D (Amendment No. 6) 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 amends the combined Tender Offer Statement on Schedule 14D-1 initially filed on February 12, 1997, as amended, and the Schedule 13D initially filed on February 5, 1997, as amended (the "Combined Statement"), 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 February 12, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together constitute the "Second Offer"). Unless otherwise defined herein, all capitalized terms used herein shall have the respective meanings given such terms in the Offer to Purchase or the Combined Statement. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder. Item 5 is hereby amended and supplemented by the following: On February 24, 1997, Mr. Goode sent a letter to Messrs. LeVan and Snow outlining Parent's proposal for a comprehensive settlement of the issues confronting the eastern railroads. The text of the letter is filed as an exhibit hereto and is incorporated herein by reference. Item 11. Material to be Filed as Exhibits. Item 11 is hereby amended and supplemented by the following: (a)(14) Revised Text of Information which may be sent to certain Company shareholders. (a)(15) Press Release issued by Parent on March 3, 1997. (a)(16) Text of Letter sent by David R. Goode, Chairman, President and Chief Executive Officer of Parent, to David M. LeVan, Chairman, President and Chief Executive Officer of the Company and John W. Snow, Chairman, President and Chief Executive Officer of CSX on February 24, 1997. 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: March 4, 1997 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 (a)(14) Revised Text of Information which may be sent to certain Company shareholders. (a)(15) Press Release issued by Parent on March 3, 1997. (a)(16) Text of Letter sent by David R. Goode, Chairman, President and Chief Executive Officer of Parent, to David M. LeVan, Chairman, President and Chief Executive Officer of the Company and John W. Snow, Chairman, President and Chief Executive Officer of CSX on February 24, 1997. EX-99 2 EXHIBIT (A)(14) [Exhibit (a)(14)] CR+NS THE BETTER CHOICE Norfolk Southern s acquisition of Conrail is the last chance to assure that there will be balanced, competitive rail transportation in the East and the service reliability and quality that competition assures. With many experts predicting a final round of rail consolidation, it is essential that competition in the East be maintained and strengthened. RAILROAD MERGERS -- A NATURAL TREND Railroads have been merging almost since the first trains ran in the United States. A common theme has run through the industry s mergers right from the start. By combining, railroads could serve more customers more efficiently with broader networks and provide better service to those customers. Driven by globalization of trade and customer demand that transportation providers serve even larger territories and offer more complete and better service, railroad consolidation in recent years has spurred the creation of large carriers that operate extensive networks throughout several regions of the United States. From approximately 40 Class I railroads that were in business in 1980 when the industry was deregulated, mergers have shrunk the roster to today s five giant systems. The West is blanketed by two companies, Union Pacific and Burlington Northern Santa Fe, while three carriers, Conrail, Norfolk Southern and CSX Transportation, cover the East. History reveals that current efforts to acquire Conrail should come as no surprise. CR+NS -- TRANSPORTATION EXCELLENCE History does not teach that all mergers are equal in benefit or harm. Some mergers are better than others. CR+NS will be superior to a CSX/CR combination in many ways. For three of the past four years, Norfolk Southern was America s Most Admired Railroad in FORTUNE s Corporate Reputations Survey. Overall, in the 1997 results Norfolk Southern ranks among the top 10% of the more than 430 companies rated. Norfolk Southern will bring this excellence in quality of service and employees, financial soundness, community and environmental responsibility, and other factors to the CR+NS combination. Customers throughout the northern U.S. will gain the benefits of Norfolk Southern intermodal expertise. Norfolk Southern s intermodal traffic has grown at twice the industry rate in the last decade and reflects Norfolk Southern s expertise and interest in shorter haul intermodal traffic. Every intermodal unit handled by CR+NS is one more long haul truck off northeastern highways. While railroads now dominate the long haul movement of truck and container freight, over-the-road truckers still prevail in short haul markets. CR+NS will change that. Rail intermodal traffic generally is competitive with trucks on hauls of 750 miles or more, but NS is competitive on hauls as short as 500 miles. Norfolk Southern will extend its bimodal Triple Crown service into new markets as well. CR+NS will bring to employees and communities the benefits of a consistently aggressive and successful industrial development department. Norfolk Southern s economic development efforts, in conjunction with the states and communities it serves, located 8 of the last 11 new auto assembly plants on Norfolk Southern. CR+NS will open markets throughout the eastern U.S. to more efficient single line service. For example, paper movements from plants in the Southeast to northeastern markets will benefit. Improved car utilization for clay shippers with movements to the Northeast will result from elimination of interchange inefficiencies. Extensive new direct, through services will be created. CR+NS will create a lot of new and faster carload services by using the best routes and best yards of the combined company. New service will link Conrail points with Kansas City. The NS route bypasses congested terminals in both Chicago and St. Louis. New carload service will operate down the Eastern Seaboard, providing direct service between Philadelphia, Wilmington and Baltimore and the Southeast. Another new carload service will operate directly from the Northeast to the Southeast on a shorter, faster route than the current I-81 corridor. Traffic that now moves the long way around via Cincinnati in joint line service now will follow these direct routes, saving both time and mileage. CR+NS will bring to the Northeast rail operations that consistently have a lower ratio of operating expenses to revenue than any other major railroad. This efficiency is achieved through the dedication and discipline of Norfolk Southern employees. Conrail employees will become part of a system with the best safety record in the industry and that is widely regarded as the best-run and most efficient railroad. Conrail and CSX facilities overlap in 60 communities, and Conrail s major Hollidaysburg and Altoona, Pa., car and locomotive shops are just 70 miles from CSX s facilities at Cumberland, Md. With far less overlap, CR+NS is likely to see far fewer job losses. Basically, CR+NS are an end-to-end merger with fewer competitive problems than a CSX/CR merger creates. Balanced competition will stimulate even greater economic activity in the region, resulting in more growth opportunities and job creation under CR+NS. CR+NS -- BALANCED COMPETITION Unlike the competing CSX/CR plan, CR+NS is pro-competitive. Putting substance to its Principles of Balanced Competition, Norfolk Southern is committed as part of its merger plan to assure competitive balance throughout the region by transferring lines to competitors. Norfolk Southern and CSX already compete vigorously throughout the Southeast and much of the Midwest, although CSX is the larger railroad. Conrail, created by the federal government in 1976 following the bankruptcy of six eastern railroads, has a virtual monopoly in the vital New York market, and dominates other parts of the Northeast. A merger of Conrail with either NS or CSX would create an unbalanced rail transportation environment throughout the East unless steps are taken to restore the balance. CSX/CR would dominate rail transportation with almost 70% of the market by revenue; without a competitive remedy the CR+NS market share would be approximately 61%. Norfolk Southern will take positive steps to remedy the imbalance. WHAT IS BALANCED COMPETITION? Balance is not merely the act of changing colors of lines on a map. Competitive balance is a combination of market share, geographic coverage, market access and commodity diversity. That is the situation that prevails in the West. Union Pacific and Burlington Northern Santa Fe both go just about everywhere and are comparable in size, although UP is slightly larger. Neither is dependent on a single commodity for its future. Balance assures that neither western carrier is in a position to dominate the rail transportation market and reduce competitive options for freight shippers. In the Southeast, CSX and NS long have competed on relatively equal terms. CSX enjoys broader geographic coverage and a 55% market share, but NS is more profitable. As an independent carrier, Conrail acts as a neutral in the Northeast, even though it competes with NS and CSX in the Midwest. Today, both NS and CSX must interchange freight with Conrail to reach customers in the Northeast. A merged Conrail, with either NS or CSX, affects much more than the Northeast. Absent the kind of competitive balance Norfolk Southern proposes and which exists in the West and Southeast today, the merged carrier would not only dominate the Northeast, it would extend that domination south and westward. As a result, the non-merging carrier would be forced to interchange much of its traffic with its competitor and eventually would be driven from now competitive markets. This elimination of competitive service would not be good for freight shippers any more than it would be good for the losing railroad. With CSX/CR, 64 cities face a reduction from two competing railroads to one, compared with only 38 two-to-one points under CR+NS. CSX/CR results in 7 cities with more than 100,000 population -- Baltimore; Philadelphia; Pittsburgh; Indianapolis; Dayton, Ohio; Grand Rapids, Mich., and Youngstown, Ohio -- in the two-to-one category. CR+NS produces only two -- Erie, Pa., and Fort Wayne, Ind. Similarly, only one short line railroad would lose competitive connections under CR+NS, while 18 would become totally tributary to CSX/CR. Norfolk Southern will maintain competition at all those points. CREATION OF BALANCED COMPETITION While a CR+NS combination has much less geographic overlap than CSX/CR, Norfolk Southern is committed to preserving competition where the systems overlap. Norfolk Southern will go farther, by opening the Northeast -- most significantly the New York/New Jersey metropolitan area and the vital ports in that region -- to service by two strong competitors for the first time in more than 20 years. This will bring competitive balance between CR+NS and CSX closer to 55%-45%. It also will assure that freight shippers will have competitive options throughout the eastern half of the nation. Norfolk Southern will further assure that competition is real by transferring ownership of competing lines. Through ownership, carriers can differentiate their service and make normal business decisions about capacity and investment. This is necessary in the Northeast, where NS and CSX lack market presence and facilities in numerous major markets. In the West, both large rail systems already were in most markets and grants of trackage rights could fine-tune competitive balance. CR+NS -- BENEFITS FOR ALL CONSTITUENCIES Norfolk Southern recognizes the public policy benefits of market share and geographic coverage balance. Basically, CR+NS has fewer disruptions to communities, workers and short line railroads than would a CSX/CR combination, as well as far greater service and efficiency benefits. For rail service customers, for rail employees, for the communities we serve, for the deregulated rail industry, and for the public at large, CR+NS clearly is THE BETTER CHOICE! 2/28/97 EX-99 3 EXHIBIT (A)(15) [Exhibit (a)(15)] FOR IMMEDIATE RELEASE March 3, 1997 Norfolk Southern Pleased With Developments Over Conrail Media Contact: Robert Fort (757) 629-2710 NORFOLK, VA -- The following statement was issued today by David R. Goode, Chairman, President and Chief Executive Officer of Norfolk Southern Corporation (NYSE: NSC): "We are pleased with today's announcement that CSX and Conrail are negotiating to resolve the issues facing the eastern railroads. "Norfolk Southern is hopeful that CSX and Conrail will quickly reach a definitive agreement that would permit CSX and Norfolk Southern to work out a plan to restructure the rail transportation system in the East into combined Conrail/Norfolk Southern and Conrail/CSX systems." ### World Wide Web Site - http://www.nscorp.com EX-99 4 EXHIBIT (A)(16) February 24, 1997 Mr. David M. LeVan Mr. John W. Snow Chairman, President and Chairman, President and Chief Executive Officer Chief Executive Officer Conrail Inc. CSX Corporation 2001 Market Street 901 East Cary Street Philadelphia, PA 19101 Richmond, VA 23219 Dear David and John: As you know, we will soon file an Application at the Surface Transportation Board (STB) for authority to acquire Conrail and, in order to achieve balanced competition, make available to another Class I railroad certain lines and rights. Because of Norfolk Southern's limited presence in the region, the Application represents a solution which is effective and relatively easy to implement, and which we believe will be attractive to shippers, public agencies and the STB. However, in an effort to respond to political and regulatory calls for settling our differences, we are prepared to offer an alternative (the Plan) for comprehensive resolution of the issues confronting the eastern railroads. The Plan offers a different approach which will require the talents of all three of our organizations to implement. The enclosed map details the Plan, showing Conrail/CSX and Conrail/Norfolk Southern operations. Conrail/CSX has a north-south route and the east-west route over Buffalo (part of old New York Central). Conrail/Norfolk Southern has a north-south route and the east-west route over Pittsburgh (part of old Pennsylvania). If you endorse the Plan, promptly after completion of definitive documentation for the Plan, Norfolk Southern and CSX will offer to acquire all the common and ESOP stock of Conrail (other than shares already in the CSX and Norfolk Southern voting trusts) for $115 cash per share and upon acquisition will deposit such shares in a voting trust or trusts. Upon completion of the tender offer, the remaining Conrail shares will be acquired in a merger. To carry out all these steps, Norfolk Southern and CSX will form a new entity. As soon as regulatory approval and labor implementing agreements are effective, Conrail will make available to Norfolk Southern and to CSX for their respective operation and control the Conrail lines and rights indicated on the map and all other Conrail operating assets. Such operation and control will be exclusive except with respect to trackage rights or joint arrangements or where both CSX and Norfolk Southern would need joint rights at terminal facilities. At some point in the future consistent with our respective business objectives, the necessary steps would be taken to make the new alignments final. Conrail's corporate headquarters will continue to be Philadelphia. The assets associated with Norfolk Southern will include the Pittsburgh service center and the Altoona and Hollidaysburg shop facilities. The assets associated with CSX will include the Philadelphia headquarters. Conrail employees in general will remain with the Conrail/CSX and Conrail/Norfolk Southern operations and assets, as determined by implementing agreements under the statute. Similarly, employees affected by coordinations between Conrail and CSX, and Conrail and Norfolk Southern, will be entitled to protection to the extent provided by statute. We anticipate that Conrail employee options and benefits would be handled in a manner analogous to that in the present Conrail/CSX agreement. The costs of acquiring all of the Conrail stock will be divided in proportion to the Conrail gross freight revenues which will accrue to Conrail/CSX operations and to Conrail/Norfolk Southern operations under the Plan (the Percentages). The calculation will be based on a study of Conrail's 1996 gross freight revenues, using standard traffic study methodology familiar to all the parties. Norfolk Southern's and CSX's interests in the new entity formed to accomplish the Plan will be in proportion to their Percentages. Conrail assets and liabilities not otherwise provided for (and not relating to a Conrail/CSX line or a Conrail/Norfolk Southern line) will ultimately be discharged or allocated in accordance with the Percentages. Tax costs, if any, associated with the Plan will generally be shared in accordance with the Percentages. Norfolk Southern is ready to begin immediately drafting documentation and pursuing the corporate actions and regulatory approvals necessary to implement the Plan. It is suggested that, with respect to their individual interests, CSX and Norfolk Southern may consider jointly engaging an independent party to expedite and mediate the process of documentation, with instructions to strive for fair, realizable and administratively simple provisions consistent with the outline here provided. The Plan is offered without prejudice to our forthcoming Application to the STB. We believe that the Application and the competi- tive alternative it proposes will provide an appropriate resolution if we cannot agree on the Plan. Upon completion of definitive documentation for the Plan, the Norfolk Southern and CSX applications could be supplement- ed or converted into a joint application to accomplish the Plan. The result of either the Application or the Plan could be an eastern railroad structure in which the Conrail/CSX and Conrail/Norfolk Southern systems compete at and between most of the major ports and markets east of the Mississippi. We believe this is a sound basis on which to build an internationally competitive economy in the region, and that the benefits of this compromise extend to our companies, employees and customers. We are willing to consider any alternative suggestions for accomplishing the same results as the Plan, which in any event is subject to confirmation of the analysis used to develop it since we do not possess the information necessary for complete validation of our estimates. Because this initiative will complicate ongoing negotiations with other railroads concerning the competitive alternative Norfolk Southern will offer in its STB Application, we must ask to hear from you by the close of business Monday, March 3, concerning your interest in seriously pursuing a solution along these lines. Sincerely, [Map of northeastern and midwestern United States illustrating Parent's proposal.] -----END PRIVACY-ENHANCED MESSAGE-----