SCHEDULE 14A INFORMATION
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Santa Fe Pacific Corporation
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Union Pacific Corporation
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(1) Amount Previously Paid: $125 on October 13, 1994
(2) Form, Schedule or Registration Statement No.: Schedule 14A
(3) Filing Party: Same as above
(4) Date Filed: October 13, 1994
[Union Pacific Corporation Letterhead]
EXPERTS SAY UNION PACIFIC'S PROPOSED MERGER WITH SANTA FE
WARRANTS FAVORABLE ICC CONSIDERATION
Bethlehem, PA, October 26 -- Union Pacific Corporation
(NYSE: UNP) today said it has sent to Santa Fe Pacific
Corporation's (NYSE: SFX) management and directors the
conclusions and individual reports of a panel of experts
regarding UP's proposed combination with Santa Fe. The
five-member panel of experts on Interstate Commerce
Commission and transportation matters reviewed a paper
that UP previously prepared and delivered to Santa Fe's
management and directors detailing the factual case that
UP would expect to make to the ICC in the event a
combination is agreed to with Santa Fe.
Based on their review of the UP paper, including the
benefits and competition-preserving conditions described,
discussions among members of the panel and their own
analysis and experience in this area, the panelists
reached the following conclusions:
The three ICC experts on the panel said:
* Union Pacific has outlined a strong case
for ICC approval of a combination with Santa
Fe that warrants favorable consideration by the ICC.
* A Union Pacific/Santa Fe combination should
have good prospects of obtaining ICC approval.
The federal transportation policy expert wrote:
* The Department of Transportation is
unlikely to oppose, and may well support, a Union
Pacific/Santa Fe combination. The benefits that
would result are "precisely" the type of objectives
that Transportation Secretary Federico Pena seems
interested in furthering as a part of the National
Transportation System.
The expert on logistics and shipper needs said:
* A Union Pacific/Santa Fe combination would
provide major benefits for the shipping
public as well as U.S. industry in general.
A combined Union Pacific/Santa Fe will
become more cost and service competitive to
the benefit of rail industry customers.
The experts further noted that ICC approval is
a long and complex process that can take two years or
longer. The experts advised that one cannot predict with
certainty the outcome of ICC review of either a UP or
Burlington Northern combination with Santa Fe.
Richard K. Davidson, Union Pacific Railroad
Company chairman and chief executive officer said, "We
asked five respected experts to address the regulatory
issues raised by Santa Fe concerning our proposal. We
believe these experts have addressed Santa Fe's
concerns."
Davidson continued, "Although there are
significant ICC issues and we cannot predict the ultimate
outcome of the review process, we believe the experts'
conclusions should dispel Santa Fe's stated concerns
about the legitimacy of our proposal. We hope that after
Santa Fe's management reviews these reports they will
agree to discuss our proposal to negotiate an alternative
transaction in the same very serious manner in which we
have presented it."
No member of the panel has ever represented
Union Pacific before the ICC or on any other matter,
except that Dr. C. John Langley, Jr., a
logistics/transportation expert, has in the past done
limited consulting for UP.
A copy of the panel's conclusions follows this
release. For copies of the experts' opinions and the
Union Pacific paper, please call either Gary Schuster at
Union Pacific, 610-861-3382, or Richard Rice at Hill and
Knowlton, 212-697-5600.
STATEMENT OF PANEL OF ICC AND TRANSPORTATION EXPERTS
The undersigned were retained by Union Pacific
Corporation to review Interstate Commerce Commission and
transportation issues relating to a possible combination
of Union Pacific and Santa Fe Pacific Corporation.
We have reviewed a memorandum, dated October
17, 1994, prepared by Mr. John H. Rebensdorf of Union
Pacific Railroad Company. Such memorandum summarizes the
key elements of the factual case that Union Pacific would
expect to make to the ICC for approval of a combination
with Santa Fe.
The memorandum describes the substantial rail
service improvements and other benefits that Union
Pacific believes would result from a Union Pacific/Santa
Fe combination. The benefits include those in three
major areas: new single-line service, other significant
service benefits, and cost savings and efficiencies. The
memorandum also discusses the possible conditions, such
as the right of other railroads to provide competitive
services over the consolidated system's lines and the
sale or lease of lines to other railroads, that Union
Pacific would be prepared to grant to other railroads in
order to address competitive issues relating to a
combination with Santa Fe.
Based on our review of this report, including
the benefits and competition-preserving conditions
described therein, discussions among members of the panel
and our own analysis and experience in this area, we
conclude the following:
Messrs. DePodesta, Kharasch and Sterrett, ICC
experts:
* Union Pacific has outlined a strong case for
ICC approval of a combination with Santa Fe
that warrants favorable consideration by the
ICC.
* A Union Pacific/Santa Fe combination should
have good prospects of obtaining ICC
approval.
Mr. McCormick, transportation expert:
* The Department of Transportation is unlikely
to oppose, and may well support, a Union
Pacific/Santa Fe combination.
Dr. Langley, logistics/transportation expert:
* A Union Pacific/Santa Fe combination would
provide major benefits for the shipping
public as well as U.S. industry in general.
A combined Union Pacific/Santa Fe will
become more cost and service competitive in
their markets to the benefit of rail
industry customers. These significant
public benefits would be difficult to
achieve otherwise.
We note that ICC approval is a long and complex
process which can take two years or longer. At this
stage, one cannot predict with certainty the outcome of
ICC review of either a Union Pacific or a Burlington
Northern combination with Santa Fe.
UNION PACIFIC PANEL OF EXPERTS
JOHN F. DEPODESTA,
attorney who has represented numerous
rail carriers and public bodies in
proceedings before the ICC; former
General Counsel of Consolidated Rail
Corporation
ROBERT N. KHARASCH,
Washington, D.C. attorney for more
than 40 years who specialized in
transportation law; coordinating
counsel for railroad opponents to the
unsuccessful Santa Fe-Southern
Pacific merger
MALCOLM M.B. STERRETT,
attorney with extensive rail
transportation experience and former
ICC Commissioner
WALTER B. MCCORMICK, JR.,
Partner, Bryan Cave, Washington, D.C.
(attorneys), and former General
Counsel of the U.S. Department of
Transportation
C. JOHN LANGLEY JR., PH.D.,
John H. "Red" Dove Distinguished
Professor of Logistics and
Transportation, University of
Tennessee
The participants in this solicitation include Union
Pacific Corporation ("Union Pacific") and the following
directors and executive officers of Union Pacific:
Robert P. Bauman (Director), Charles E. Billingsley (Vice
President, Controller), Richard B. Cheney (Director), E.
Virgil Conway (Director), Richard K. Davidson (Director,
President), John E. Dowling (Vice President - Corporate
Development), Spencer F. Eccles (Director), Ursula F.
Fairbairn (Senior Vice President - Human Resources),
Elbridge T. Gerry, Jr. (Director), William H. Gray, III
(Director), John B. Gremillion, Jr. (Vice President -
Taxes), Judith Richards Hope (Director), Lawrence M.
Jones (Director), Drew Lewis (Director, Chairman and
Chief Executive Officer), Richard J. Mahoney (Director),
Claudine B. Malone (Director), L. White Matthews, III
(Director, Executive Vice President - Finance), Mary E.
McAuliffe (Vice President - External Relations), Jack L.
Messman (Director), John R. Meyer (Director), Thomas A.
Reynolds, Jr. (Director), James D. Robinson, III
(Director), Robert W. Roth (Director), Gary F. Schuster
(Vice President - Corporate Relations), Richard D.
Simmons (Director), Gary M. Stuart (Vice President and
Treasurer), Judy L. Swantak (Vice President and Corporate
Secretary), Carl W. von Bernuth (Senior Vice President
and General Counsel). Union Pacific is the beneficial
holder of 200 shares of the common stock of Santa Fe
Pacific Corporation ("Santa Fe") purchased on October 6,
1994. 100 of such shares were purchased for $14 per
share in an open market transaction entered into on the
over-the-counter market and 100 of such shares were
purchased for $13-1/2 per share in an open market
transaction executed on the NYSE. No directors or
executive officers of Union Pacific own any shares of
Santa Fe common stock.
Certain employees of Union Pacific may be participants:
Mary S. Jones (Assistant Treasurer of Union Pacific),
Gary W. Grosz (Manager - Investor Relations of Union
Pacific), John J. Koraleski (Executive Vice President,
Finance and Information Technologies of Union Pacific
Railroad Company), James A. Shattuck (Executive Vice
President, Marketing and Sales of Union Pacific Railroad
Company), Arthur L. Shoener (Executive Vice President,
Operations of Union Pacific Railroad Company), James V.
Dolan (Vice President, Law of Union Pacific Railroad
Company), Michael F. Kelly (Vice President, Marketing -
Services of Union Pacific Railroad Company), John H.
Rebensdorf (Vice President, Strategic Planning of Union
Pacific Railroad Company). The aforementioned employees
of Union Pacific own in the aggregate less than 1% of the
outstanding shares of Santa Fe common stock.
Certain other representatives of Union Pacific who may be
participants:
Richard H. Bott (Managing Director at CSFirst Boston
Corporation), David A. DeNunzio (Managing Director at
CSFirst Boston Corporation), Gerald M. Lodge (Managing
Director at CSFirst Boston Corporation), Stephen C. Month
(Director at CSFirst Boston Corporation), Scott R. White
(Associate at CSFirst Boston Corporation), Samuel H.
Schwartz (Associate at CSFirst Boston Corporation),
Caroline P. Sykes (Analyst at CSFirst Boston
Corporation). None of the aforementioned employees of
CSFirst Boston Corporation own any shares of Santa Fe
common stock. In the normal course of its business,
CSFirst Boston may trade the debt and equity securities
of Santa Fe for its own account and the accounts of its
customers and, accordingly, may at any time hold a long
or short position in such securities. As of October 26,
1994, CSFirst Boston Corporation held a net short
position of less than 1% of the outstanding shares of
Santa Fe common stock.
