Conrail, CSX Sue Norfolk Southern, Charge Merger Interference
PHILADELPHIA (AP) _ Conrail and CSX Corp. sued Norfolk Southern Corp. Thursday, accusing the railroad of interfering in their merger agreement.
Norfolk Southern has been leading an energetic campaign against the Conrail-CSX agreement, bidding $110 per share for Conrail stock and arguing in court and in public statements that its offer is superior to CSX’s.
In the federal lawsuit, Conrail and CSX say Norfolk Southern never intended to acquire Conrail but wanted to disrupt and cripple a strategic alliance between CSX and Conrail.
The railroads say Norfolk Southern’s actions were malicious and asked for punitive damages and a jury trial.
In a statement, Norfolk Southern called the claims ``frivolous _ an obvious attempt to divert attention away from the fact that the CSX-Conrail deal remains inferior to Norfolk Southern’s better offer.″
The statement said if the two companies believed Norfolk Southern wasn’t serious about acquiring Conrail, they should remove barriers to its offer.
CSX and Conrail said in a joint statement, ``Despite Norfolk Southern’s ongoing campaign to destroy the Conrail-CSX strategic merger, we are confident that the merger will be successfully completed.
``Norfolk Southern has flooded the marketplace with false and misleading information concerning both the CSX-Conrail merger and its conditional hostile tender offer. Norfolk should be held accountable for its actions,″ the statement said.
Thomas E. Hoppin, a spokesman for Richmond-based CSX, said the railroad would have no comment on the case beyond the joint statement.
Conrail, based in Philadelphia, announced Oct. 15 that it would merge with CSX in a cash-and-stock deal that would total about $8.5 billion today. A week later, Norfolk Southern offered to buy all Conrail stock for $10 billion in cash.
At stake is control of a railroad that would make either suitor the No. 3 freight line in the United States with command over lines in the heavily populated eastern half of the country.
Thursday was the deadline for shareholders to participate in a critical upcoming vote in the merger battle. Only shareholders of record as of Thursday will be eligible to vote Dec. 23, when they will be asked to approve lifting protection of a Pennsylvania law that blocks CSX from buying more than 20 percent of Conrail stock.
CSX already holds 19.9 percent and plans to buy 20 percent more for cash if it wins shareholder approval. Norfolk Southern has urged shareholders, including Conrail employees who own stock, to vote against the proposal.