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Norfolk Southern Quietly Abandoning Effort To Acquire Conrail

August 20, 1986

WASHINGTON (AP) _ With its $1.9 billion bid for Conrail stalled in the House, Norfolk Southern Corp. says it is all but abandoning its effort to acquire the railroad rather than pursue 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, despite the backing of Transportation Secretary Elizabeth Dole.

Instead of devoting more time to promoting their 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.

″The burden of getting something through Congress is a lot harder than defeating it,″ Granum said.

It being clear that Norfolk Southern won’t succeed, the firm 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 - as 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But Granum said that Norfolk Southern has not formally withdrawn its offer.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, Mrs. 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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