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Norfolk Southern Won’t Push ‘Kamikaze Mission’ To Buy Conrail

August 19, 1986

WASHINGTON (AP) _ Eighteen months after its bid for Conrail was endorsed by the Reagan administration, Norfolk Southern Corp. acknowledged Tuesday that its offer was all but dead and that it did not want to alienate Congress by pursuing a ″kamikaze mission.″

In interviews, Norfolk Southern executives made their strongest statements yet that their push to acquire the government-owned Conrail was unlikely to succeed in Congress.

Rather than continuing to devote more time and effort to promoting their $1.9 billion offer, the officials said they were turning their attention to other legislative matters, including trying to prevent a rewriting of the 1980 railroad deregulation act.

Some $10 million may have been spent so far on public relations, lobbying and financial consultants in Norfolk Southern’s bid to acquire the 10-year-old freight line, according to Jim Granum, the holding company’s assistant vice- president for public affairs.

It being clear that the effort won’t succeed, Norfolk Southern is not intent on being a spoiler, he said.

Granum said Norfolk Southern might not oppose legislation calling for a sale of Conrail in a public stock offering - so long as the measure did not become a ″Christmas tree″ on which lawmakers could hang certain other railroad-related provisions.

″We’re willing to accept the verdict of Congress and not look back,″ former Kentucky Gov. Edward Breathitt of Norfolk Southern said in an interview in the Norfolk Virginian-Pilot.

″We don’t have the attitude of ’I can’t get it, but I don’t want anybody else to have it,‴ Granum said. ″We have been in Washington a long time. It’s a very gentlemanly company. We’re not going to alienate Congress on a futile, Kamikaze mission.″

But Granum said that Norfolk Southern has not formally withdrawn its offer. It wants to remain a player in the Conrail matter, and believes there is always the chance that ″the good fairy might still tap you on the head,″ he said.

In February 1985, Transportation Secretary Elizabeth Dole selected Norfolk Southern’s offer from among 15 bids for Conrail, which began operating in 1976 using the rail properties of the Penn Central and five other ailing railroads purchased by the government.

Norfolk Southern’s offer won Senate approval one year later, but the bid stalled in the House, where critics said merging the two rail systems would create anticompetitive conditions in the industry.

Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee, has called for a Conrail public stock offering on grounds that it would eliminate antitrust concerns and could capture a larger return for the government than Norfolk Southern’s $1.9 billion bid.

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