Rival Railroads Discussing Post-Merger Access Plans
RICHMOND, Va. (AP) _ Two railroads that have made rival bids to buy Conrail Inc. said Monday they are discussing post-merger plans that would allow the loser access to the combined rail lines.
CSX Corp., which made the first offer to buy Conrail, said it was considering selling rail lines or routes to Norfolk Southern Corp., which put in a higher bid for Conrail.
The news sent Conrail stock falling while CSX and Norfolk Southern shares both rose.
``There would only be one carrier after the merger where there are now two. We’re committed to granting competitive access to maintain two-rail competition,″ said Vance Richardson, a spokesman at CSX headquarters in Richmond.
David R. Goode, chief executive officer of Norfolk-based Norfolk Southern, said the company remained committed to buying Conrail but recognized the necessity of access after the merger.
``Our willingness to talk to CSX at its suggestion is consistent with my previously announced position that Conrail cannot be acquired by either CSX or NS without a plan to maintain a balanced competitive structure for Eastern railroad service,″ Goode said.
Conrail spokesman Rudy Husband declined to comment.
But Steven Lewins, an analyst with Gruntal & Co. in New York, said the talks between CSX and Norfolk Southern came as no surprise.
``This is a situation where everybody wins,″ Lewins said.
If CSX and Norfolk Southern agree to divide up Conrail, they could become the two dominant railroads in the East, he said.
By the turn of the century, they could merge with the two dominant railroads in the West _ Union Pacific and Burlington Northern _ to create two strong transatlantic freight carriers, Lewin said.
Meanwhile, in Philadelphia, a federal judge denied Norfolk Southern’s request for a temporary restraining order to prevent Conrail from implementing a ``poison pill″ defense plan.
On the New York Stock Exchange, Conrail fell $1.62 1/2 to close at $93.62 1/2 a share, while CSX rose $1.87 1/2 to $44.87 1/2 and Norfolk Southern gained $1.37 1/2 to $90.75.