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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ X / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Santa Fe Pacific Corporation
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Name of Registrant as Specified In Its Charter
Union Pacific Corporation
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(Namess or Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each party of the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
/ X / Check box if any party of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and date of its
filing.
(1) Amount Previously Paid: $125 was paid 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.
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THIS DOCUMENT IS A REVISED PRELIMINARY PROXY STATEMENT. AT THIS TIME
UNION PACIFIC IS NOT FURNISHING SANTA FE STOCKHOLDERS WITH A PROXY CARD.
REVISED PRELIMINARY COPY
SUBJECT TO COMPLETION
OCTOBER 24, 1994
SPECIAL MEETING OF STOCKHOLDERS
OF
SANTA FE PACIFIC CORPORATION
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PROXY STATEMENT
OF
UNION PACIFIC CORPORATION
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SOLICITATION OF PROXIES
IN OPPOSITION TO THE PROPOSED MERGER OF
SANTA FE PACIFIC CORPORATION AND
BURLINGTON NORTHERN INC.
This Proxy Statement is furnished by Union Pacific Corporation, a Utah
corporation ("Union Pacific"), in connection with its solicitation of proxies to
be used at a special meeting of stockholders of Santa Fe Pacific Corporation, a
Delaware corporation ("Santa Fe"), and at any adjournments, postponements or
reschedulings thereof (the "Special Meeting"). Pursuant to this Proxy Statement,
Union Pacific is soliciting proxies from stockholders of Santa Fe to vote
against Santa Fe's proposal to merge Santa Fe with and into Burlington Northern
Inc., a Delaware corporation ("BN") (such proposed merger, the "Santa Fe/BN
Merger"). According to the Burlington Northern Inc. and Santa Fe Pacific
Corporation Joint Proxy Statement (the "Santa Fe Joint Proxy Statement"), Santa
Fe has fixed November 18, 1994 as the date of the Special Meeting and October
19, 1994 as the record date for determining those stockholders of Santa Fe who
will be entitled to vote at the Special Meeting (the "Record Date"). This Proxy
Statement and the enclosed proxy are first being sent or given to stockholders
of Santa Fe on or about October , 1994. The principal executive offices of
Santa Fe are located at 1700 East Golf Road, Schaumburg, Illinois 60173-5860.
The principal executive offices of Union Pacific are located at Martin Tower,
Eighth and Eaton Avenues, Bethlehem, Pennsylvania 18018.
On October 5, 1994, Union Pacific made a proposal to acquire Santa Fe in a
negotiated merger transaction (the "Union Pacific Proposal"), pursuant to which
the stockholders of Santa Fe would receive Union Pacific common stock
representing a substantial premium to the consideration being offered in the
Santa Fe/BN Merger. On October 11, 1994, Union Pacific advised Santa Fe that it
is prepared to receive information from Santa Fe that might justify a higher
price. THE UNION PACIFIC PROPOSAL CONSTITUTES AN INVITATION TO THE BOARD OF
DIRECTORS OF SANTA FE TO ENTER INTO MERGER NEGOTIATIONS WITH UNION PACIFIC. THE
UNION PACIFIC PROPOSAL IS SUBJECT TO CERTAIN CONDITIONS AND DOES NOT CONSTITUTE
A LEGALLY BINDING OBLIGATION ON THE PART OF UNION PACIFIC. See "Union Pacific
Proposal".
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IF YOU WANT THE OPPORTUNITY TO RECEIVE THE SUBSTANTIAL PREMIUM PROPOSED BY
UNION PACIFIC, WE URGE YOU TO PROMPTLY VOTE AGAINST THE SANTA FE/BN MERGER BY
SIGNING, DATING AND MAILING THE ENCLOSED GOLD PROXY.
- ----------------------------------IMPORTANT-----------------------------------
UNION PACIFIC WILL WITHDRAW THE UNION PACIFIC PROPOSAL IF
STOCKHOLDERS OF SANTA FE APPROVE THE SANTA FE/BN MERGER.
- ------------------------------------------------------------------------------
REJECTION OF THE SANTA FE/BN MERGER WILL SEND AN IMPORTANT MESSAGE TO YOUR
BOARD THAT YOU WANT THEM TO NEGOTIATE WITH UNION PACIFIC IN AN EFFORT TO
MAXIMIZE THE VALUE OF YOUR SHARES.
EVEN IF YOU HAVE ALREADY SENT A PROXY TO THE BOARD OF DIRECTORS OF SANTA
FE, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE. YOU MAY REVOKE THAT PROXY AND VOTE
AGAINST THE SANTA FE/BN MERGER BY SIGNING, DATING AND MAILING THE ENCLOSED GOLD
PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. NO POSTAGE IS NECESSARY IF YOUR
PROXY IS MAILED IN THE UNITED STATES.
PLEASE SIGN, DATE AND MAIL THE GOLD PROXY TODAY.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF
OFFERS TO BUY ANY SECURITIES WHICH MAY BE ISSUED IN ANY MERGER OR SIMILAR
BUSINESS COMBINATION INVOLVING UNION PACIFIC AND SANTA FE. THE ISSUANCE OF SUCH
SECURITIES WOULD HAVE TO BE REGISTERED UNDER THE SECURITIES ACT OF 1933 AND SUCH
SECURITIES WOULD BE OFFERED ONLY BY MEANS OF A PROSPECTUS COMPLYING WITH THE
REQUIREMENTS OF SUCH ACT.
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SEND A MESSAGE TO THE SANTA FE BOARD
The Santa Fe Board of Directors has scheduled a Special Meeting of
Stockholders for November 18, 1994, and is trying to solicit votes to approve
the Santa Fe/BN Merger. According to the Santa Fe Joint Proxy Statement, it
could take almost 18 months to obtain regulatory approval from the Interstate
Commerce Commission ("ICC") and it may take more than 2 1/2 years. The Santa
Fe/BN Merger cannot occur until ICC approval is obtained.
Union Pacific believes that there is no reason for the Santa Fe Board to
require Santa Fe stockholders to vote on the Santa Fe/BN Merger now, nor is
there any reason for Santa Fe stockholders to rush to judgment on that
transaction. Since the Santa Fe Board is insisting on proceeding with a
stockholder vote on November 18, 1994, Union Pacific believes that Santa Fe
stockholders can best protect their interests by voting AGAINST the merger with
BN. By voting AGAINST the Santa Fe/BN Merger, stockholders can send a strong
message to Santa Fe's directors that they should negotiate with Union Pacific.
In sending this message to the Santa Fe Board, stockholders should keep in
mind that Santa Fe has been told by its financial advisor that the exchange
ratio in the Santa Fe/BN Merger is fair to stockholders of Santa Fe -- and yet,
the Union Pacific Proposal represents a substantial premium to the consideration
offered in the Santa Fe/BN Merger.
In addition, based on the current dividend rates of Union Pacific and
Burlington Northern, on a per share equivalent basis the Union Pacific Proposal
would provide Santa Fe stockholders with an indicated annual dividend of $.59
for each Santa Fe share, as compared to only $.32 per share pursuant to the
Santa Fe/BN Merger. The indicated annual dividend rate is determined by
multiplying (i) the current annual dividend rate on shares of common stock of
Union Pacific or BN, as the case may be, by (ii) the applicable exchange ratio.
There can be no assurance that BN or Union Pacific will continue to pay
dividends at rates currently in effect or will pay any dividend in the future.
Union Pacific stands ready to enter into immediate merger negotiations with
Santa Fe. Union Pacific believes that such a transaction would be
enthusiastically supported by Santa Fe stockholders, customers and other
constituencies. The Union Pacific Proposal, which is a stock-for-stock merger
proposal, is intended to be tax-free to stockholders of Santa Fe. If the
combination of Union Pacific and Santa Fe is structured differently, it will not
necessarily be tax-free to stockholders of Santa Fe.
UNION PACIFIC PROPOSAL
On October 5, 1994, Mr. Drew Lewis, Chairman and Chief Executive Officer,
and Richard K. Davidson, President, of Union Pacific met with Mr. Robert D.
Krebs, Chairman, President and Chief Executive Officer of Santa Fe, and Robert
A. Helman, of the law firm of Mayer, Brown & Platt, counsel for Santa Fe. At the
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end of the meeting, Mr. Lewis delivered the following letter to Mr. Krebs
describing the Union Pacific Proposal:
October 5, 1994
Mr. Robert D. Krebs
Chairman, President & CEO
Santa Fe Pacific Corporation
1700 E. Golf Road
Schaumburg, IL 60173
Dear Rob:
I would like to thank you for meeting with Dick and me earlier
today to discuss a possible combination of our two companies. We have
long admired Santa Fe and your excellent management and work force. As
we discussed, we at Union Pacific believe that combining the strengths
of Santa Fe and Union Pacific represents an extraordinary opportunity
for our two companies, our respective shareholders, customers and
employees, and the railroad industry.
I was disappointed by your unwillingness to consider our proposal.
As I mentioned, we view this transaction as a strategic imperative.
Accordingly, I am writing to submit the following proposal to combine
our companies. Because of the very significant benefits that it would
provide to your Company, your shareholders and other constituencies, we
ask that you and your Board of Directors give careful consideration to
our proposal.
Terms
We propose that Union Pacific acquire Santa Fe in a merger in which
Santa Fe shareholders would receive, for each of their shares, .344 of a
share of Union Pacific common stock, having a value of $18 per Santa Fe
share based on yesterday's closing price of Union Pacific stock.
This price represents a premium of 38% over yesterday's closing
price of Santa Fe common stock. Our proposed price also represents a
premium of 33% over the current value of the Burlington Northern
transaction, which was endorsed by your financial advisors as fair to
your shareholders.
In addition to receiving a substantial premium, your shareholders
would be able to participate in an exceptional opportunity for growth
and increased value through their ongoing interest in what we believe
would be the preeminent railroad company in the country.
Our proposed transaction would be tax-free to both our companies
and to your shareholders. This would allow your shareholders to defer
paying tax, or recognizing gain or loss on their shares, until they sell
at a time of their choice.
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Benefits of Transaction
In addition to providing superior benefits for your shareholders,
we believe our transaction will provide greater benefits to the shipping
public and will do more to strengthen rail competition in the west than
the Burlington Northern transaction. A Union Pacific-Santa Fe
combination will produce service breakthroughs that a Burlington
Northern-Santa Fe merger cannot, including more new single-line service
and greater savings and efficiencies. To insure that our transaction
will strengthen rail competition in all affected markets, we are
prepared to grant conditions to Southern Pacific, Burlington Northern or
other railroads, including access to points that would otherwise change
from two serving railroads to one, rights to handle service-sensitive
business moving between California, Chicago and the Midwest, and access
to the Kansas and Oklahoma grain markets.
Continuity of Management
We have great respect for your management and employees and believe
they would make important contributions to our combined company. We
envision that certain members of the Santa Fe Board would be invited to
serve on Union Pacific's Board. This participation would facilitate the
integration and growth of the two companies.
Process
Our Board of Directors strongly supports the proposed transaction
and has authorized management to pursue this proposal with you. We are
prepared to immediately commence negotiation of a definitive merger
agreement containing mutually agreeable terms and conditions.
We have conducted an extensive analysis of Santa Fe based on
publicly available information. While our proposal is necessarily
subject to confirmation, through appropriate due diligence, that our
understanding of Santa Fe based on publicly available information is
accurate, we expect that such due diligence will confirm our view of
Santa Fe and its prospects. We recognize that you will need to conduct a
due diligence review of Union Pacific and its operations, and we are
ready to facilitate that process.
Our transaction, like the proposed Burlington Northern merger, is
contingent upon ICC approval. Although this is a significant matter for
either transaction, we believe that, working together, we can present
strong arguments to the Commission as to the benefits of our transaction
to customers and the industry.
Our proposal also would be subject to termination of your merger
agreement with Burlington Northern, in accordance with the terms of that
agreement, approval of a mutually satisfactory merger agreement by our
respective Boards of Directors, and approval of our respective
shareholders.
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Along with our financial advisor, CS First Boston Corporation, and
our legal advisor, Skadden, Arps, Slate, Meagher & Flom, we look forward
to meeting with you and your advisors to discuss our proposal and to
working to implement this transaction. We have the opportunity to build
the best railroad in the country and to provide significant immediate
and long-term benefits for your shareholders.
I am hopeful your Board will conclude that your shareholders should
not be denied the opportunity to consider this offer. We at Union
Pacific are determined to take every appropriate action to pursue this
transaction. In view of the importance of this matter, time is of the
essence and we await your earliest possible response.
Please call me as soon as possible so we can get together to
discuss this matter in detail.
Sincerely,
/s/ Drew Lewis
On October 6, 1994, Mr. Krebs delivered the following letter to Mr. Lewis:
October 6, 1994
Mr. Drew Lewis
Chairman and Chief Executive Officer
Union Pacific Corporation
Martin Tower
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Dear Mr. Lewis:
The Board of Directors of Santa Fe Pacific Corporation ("SFP") has
authorized me to reject, on behalf of SFP, the proposal of Union Pacific
Corporation ("UP") dated October 5, 1994, to acquire SFP. You stated at
our meeting yesterday that UP might be willing to offer more -- $20 per
share -- and would consider using a voting trust for UP's proposed
transaction. These statements are inconsistent with UP's proposal and
its press release.
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If UP makes a proposal at a fair price and with an adequate
provision for a voting trust that would substantially eliminate the
regulatory risk for SFP shareholders, the Board would consider that
proposal in light of its fiduciary duties.
Sincerely,
/s/ Robert D. Krebs
On October 11, 1994, Mr. Lewis sent the following letter to Mr. Krebs:
October 11, 1994
Mr. Robert D. Krebs
Chairman, President and CEO
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, IL 60173
Dear Rob:
I am in receipt of your October 6 letter.
In light of your Board's fiduciary obligations, we were
disappointed by your failure to give careful consideration to our
proposal or to meet with us to discuss our transaction. We remain
convinced that our proposal is a superior alternative to your proposed
transaction with Burlington Northern, providing a premium price to your
shareholders as well as significant benefits for shippers and the rail
industry.
We believe it is a disservice to your shareholders for you to
publicly speculate, inaccurately, as to the motivation for our proposal
rather than giving us an opportunity to respond to your concerns. We do
not understand how you, your Board and advisors could pass judgment on
complex regulatory matters only one day after receiving our proposal
without considering our analysis of ICC matters, including the
unprecedented public benefits that would result from the UP-Santa Fe
transaction and the conditions we are prepared to grant to other
railroads to strengthen rail competition in the West.
If you and your advisors agree to discuss our proposal in the
exercise of your fiduciary duties in accordance with the terms of your
merger agreement with Burlington Northern, we can present compelling
reasons to convince you that our proposal is superior and in the best
interests of your shareholders, and address your stated concerns
regarding regulatory approvals.
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As to your stated willingness to consider a "fair price," our
current proposed purchase price represents a significant premium over
the value of the Burlington Northern transaction, which your financial
advisors have already endorsed as fair to your shareholders. We would be
prepared to receive information from you that might justify a greater
consideration.
I again call upon you and your Board to give careful consideration
to our proposal and to exercise your fiduciary obligations to meet with
us and our advisors at the earliest possible time. Your shareholders
should not be denied the opportunity to consider our proposal.
Sincerely,
/s/ Drew Lewis
cc: Board of Directors
Santa Fe Pacific Corporation
On October 11, 1994, Mr. Krebs sent the following letter to Mr. Lewis:
October 11, 1994
Mr. Drew Lewis
Chairman and Chief Executive Officer
Union Pacific Corporation
Martin Tower
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Dear Mr. Lewis:
Your October 11, 1994 letter has been reviewed by the Santa Fe
Pacific board. The board has concluded that your October 11 letter
really adds nothing to your October 5 letter. However, the board has
authorized me to ask you to provide us promptly with Union Pacific's
"analysis of ICC
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matters," as referenced in your letter. Unless and until we receive
something to change the position set forth in my October 6, 1994 letter
to you, that position still stands.
Sincerely,
Robert D. Krebs
Chairman, President and
Chief Executive Officer
On October 12, 1994, Mr. Lewis sent the following letter to Mr. Krebs:
October 12, 1994
Mr. Robert D. Krebs
Chairman, President and CEO
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, IL 60173
Dear Rob:
We are encouraged by your October 11 response indicating a
willingness to consider our analysis of regulatory matters relating to
our proposed transaction. We will provide materials and would welcome
the opportunity, in accordance with your existing merger agreement, to
sit down with you and your advisors to address your concerns.
We will be in contact with you shortly to arrange the delivery of
materials.
Sincerely,
/s/ Drew Lewis
cc: Board of Directors
Santa Fe Pacific Corporation
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Both the Santa Fe/BN Merger and a combination of Santa Fe and Union Pacific
would require approval of the ICC. ICC approval is a long and complex process
which can take two years or longer and Union Pacific believes that it is
premature for Santa Fe, BN or Union Pacific to predict with any degree of
certainty what the ultimate outcome will be. Under the basic statutory standard,
the ICC is required to approve a transaction if it is consistent with the public
interest. Union Pacific recently provided the Santa Fe Board with a report
summarizing the key elements of the factual case that would be included in Union
Pacific's application to the ICC for approval of a combination with Santa Fe.
The report describes the substantial rail service improvements and other
benefits that Union Pacific believes would result from a Union Pacific/Santa Fe
combination. The report also discusses the conditions (e.g., the right to run
trains over Union Pacific 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.
Union Pacific believes that, in the context of a negotiated merger transaction
with Santa Fe and given Union Pacific's willingness to grant appropriate
conditions to other railroads, it will be able to make a credible case for ICC
approval.
SANTA FE/BN MERGER PROPOSAL
Santa Fe has distributed the Santa Fe Joint Proxy Statement to Santa Fe
stockholders describing the terms of the Santa Fe/BN Merger, as well as other
related matters. A summary description of the Santa Fe/BN Merger based on
publicly available information appears below under "Summary of the Santa Fe/BN
Merger".
Union Pacific is soliciting proxies from stockholders of Santa Fe in
opposition to the Santa Fe/BN Merger. Union Pacific urges all stockholders of
Santa Fe to vote AGAINST the Santa Fe/BN Merger.
SUMMARY OF THE SANTA FE/BN MERGER
The Santa Fe/BN Merger provides for the merger of Santa Fe with and into
BN. Under the terms of the Santa Fe/BN Merger, each outstanding share of Santa
Fe common stock (subject to certain exceptions) would be converted into 0.27 of
a share of common stock of BN, valued at $13.53 per share of Santa Fe common
stock, based upon the closing price of BN common stock on October 21, 1994.
According to the Santa Fe Joint Proxy Statement, the Santa Fe/BN Merger is
intended to be tax-free to stockholders of Santa Fe.
The obligation of the parties to effect the Santa Fe/BN Merger is subject
to certain conditions, including, among others, approval by stockholders of
Santa Fe and by stockholders of BN and certain regulatory approvals. One of the
required approvals is approval of the Interstate Commerce Commission. The Santa
Fe/BN Merger must be approved by the holders of a majority of the outstanding
shares of Santa Fe common stock and the holders of a majority of the outstanding
shares of BN common stock. According to the Santa Fe Joint Proxy Statement,
Santa Fe has fixed November 18, 1994 as the date of the Special Meeting
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and October 19, 1994 as the Record Date for determining those stockholders of
Santa Fe who will be entitled to vote at the Special Meeting.
OTHER INFORMATION
Approval of the Santa Fe/BN Merger requires the affirmative vote of the
holders of a majority of all outstanding shares of Santa Fe common stock. All
outstanding shares of Santa Fe common stock as of the close of business on the
Record Date will be entitled to vote at the Special Meeting. Each share of Santa
Fe common stock is entitled to one vote. According to the Santa Fe Joint Proxy
Statement, there were outstanding 186,996,400 shares of Santa Fe common stock as
of October 10, 1994. As of the date hereof, Union Pacific beneficially owns 200
shares of Santa Fe common stock. Shares of Santa Fe common stock not voted
(including broker non-votes) and shares of Santa Fe common stock voted to
"abstain" from such vote will have the same effect as a vote "against" the Santa
Fe/BN Merger.
The accompanying GOLD proxy will be voted in accordance with the
stockholder's instructions on such GOLD proxy. Stockholders may vote against the
Santa Fe/BN Merger by marking the proper box on the GOLD proxy. If no
instructions are given, the GOLD proxy will be voted AGAINST the Santa Fe/BN
Merger.
UNION PACIFIC STRONGLY RECOMMENDS A VOTE AGAINST THE SANTA FE/BN MERGER.
VOTING YOUR SHARES
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, WE URGE YOU TO VOTE
AGAINST THE SANTA FE/BN MERGER ON THE ENCLOSED GOLD PROXY AND IMMEDIATELY MAIL
IT IN THE ENCLOSED ENVELOPE. YOU MAY DO THIS EVEN IF YOU HAVE ALREADY SENT IN A
DIFFERENT PROXY SOLICITED BY SANTA FE'S BOARD OF DIRECTORS. IT IS THE LATEST
DATED PROXY THAT COUNTS. EXECUTION AND DELIVERY OF A PROXY BY A RECORD HOLDER OF
SHARES OF SANTA FE COMMON STOCK WILL BE PRESUMED TO BE A PROXY WITH RESPECT TO
ALL SHARES OF SANTA FE COMMON STOCK HELD BY SUCH RECORD HOLDER UNLESS THE PROXY
SPECIFIES OTHERWISE.
YOU MAY REVOKE ANY PROXY YOU SUBMIT (WHETHER THE WHITE PROXY SOLICITED BY
SANTA FE OR THE GOLD PROXY SOLICITED BY UNION PACIFIC) AT ANY TIME PRIOR TO ITS
EXERCISE BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON, BY SUBMITTING A
DULY EXECUTED LATER DATED PROXY OR BY SUBMITTING A WRITTEN NOTICE OF REVOCATION.
UNLESS REVOKED IN THE MANNER SET FORTH ABOVE, DULY EXECUTED PROXIES IN THE FORM
ENCLOSED WILL BE VOTED AT THE SPECIAL MEETING ON THE PROPOSED SANTA FE/BN MERGER
IN ACCORDANCE WITH YOUR INSTRUCTIONS. IN THE ABSENCE OF SUCH INSTRUCTIONS, SUCH
PROXIES WILL BE VOTED AGAINST THE SANTA FE/BN MERGER. IF ANY OTHER MATTERS ARE
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PROPERLY BROUGHT BEFORE THE SPECIAL MEETING, SUCH PROXIES WILL BE VOTED ON SUCH
MATTERS AS UNION PACIFIC, IN ITS SOLE DISCRETION, MAY DETERMINE.
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE GOLD PROXY TODAY.
IF YOU HAVE ALREADY SENT A PROXY TO THE BOARD OF DIRECTORS OF SANTA FE, YOU
MAY REVOKE THAT PROXY AND VOTE AGAINST THE SANTA FE/BN MERGER BY SIGNING, DATING
AND MAILING THE ENCLOSED GOLD PROXY.
If you have any questions about the voting of shares of Santa Fe common
stock, please call:
MORROW & CO., INC.
Call Toll Free: (800) 856-8309
In New York City, call: (212) 754-8000
CERTAIN LITIGATION CONCERNING
THE SANTA FE/BN MERGER
On October 6, 1994, Union Pacific filed suit in the Court of Chancery in
Delaware against Santa Fe, BN and the members of the Board of Directors of Santa
Fe seeking, among other things, a declaratory judgment that the Merger Agreement
between Santa Fe and BN is terminable by Santa Fe in order to allow Santa Fe to
accept Union Pacific's superior merger proposal, and an injunction requiring
Santa Fe to negotiate with Union Pacific regarding the Union Pacific Proposal.
Union Pacific is also seeking a declaratory judgment that Union Pacific has not
tortiously interfered with the contractual relations of Santa Fe and BN. On
October 7, 1994, Union Pacific moved for expedited discovery on the ground that
expedition is essential to permit Union Pacific to obtain timely relief against
the continuing breaches of fiduciary duty by the Board of Directors of Santa Fe.
As of October 21, 1994, the defendants had not yet filed an answer.
On June 30, 1994, four suits were filed in the Court of Chancery in
Delaware by stockholders of Santa Fe against Santa Fe, BN and the members of the
Board of Directors of Santa Fe. Each of these suits was filed as a class action
on behalf of all stockholders of Santa Fe except the defendants and their
affiliates, and alleged, among other things, that the defendants had breached
their fiduciary duties to the plaintiffs by agreeing to sell Santa Fe's railroad
assets to BN for grossly inadequate consideration. On October 6, 1994, an
amended complaint was filed in these actions alleging in addition that the
defendants had breached their fiduciary duties by failing to fully inform
themselves with regard to the Union Pacific Proposal.
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On October 6 and 7, 1994, eight additional suits were filed in the Court of
Chancery in Delaware by stockholders of Santa Fe against Santa Fe, BN and the
members of the Board of Directors of Santa Fe. Each of these suits was filed as
a class action on behalf of all stockholders of Santa Fe except the defendants
and their affiliates, and alleged, among other things, that the defendants had
breached their fiduciary duties to the plaintiffs by failing to negotiate with
Union Pacific regarding the Union Pacific Proposal.
On October 14, 1994, the Santa Fe stockholder-plaintiffs in the twelve
suits previously filed in the Delaware Court of Chancery filed a Consolidated
and Amended Complaint against Santa Fe, the members of its Board of Directors
(the "director defendants") and BN, styled In re Santa Fe Pacific Shareholder
Litigation, Del. Ch., Cons. C.A. No. 13567 (the "Consolidated Shareholder
Action"). The Consolidated Shareholder Action, which was filed as a class action
on behalf of all stockholders of Santa Fe as of June 30, 1994 (except for the
defendants and their affiliates) who are or will be threatened with injury
arising from the defendants' actions, alleged, among other things, that (i) the
director defendants breached their fiduciary duties of care and loyalty by
failing to inform themselves and explore adequately all alternatives available
to Santa Fe stockholders (including the Union Pacific Proposal), by approving
and recommending the inferior Santa Fe/BN Merger, and by approving and enforcing
the Merger Agreement; (ii) the director defendants breached their fiduciary
duties of disclosure by failing to completely disclose all material information
in the Santa Fe Joint Proxy Statement; and (iii) BN aided and abetted such
breaches of fiduciary duty. The Consolidated Shareholder Action, among other
things, seeks preliminary and permanent injunctive relief against the
consummation of the Santa Fe/BN Merger, a court order requiring the director
defendants to explore alternatives with, provide information to and negotiate in
good faith with any bona fide bidder (including Union Pacific), a court order
decreeing that the Merger Agreement is terminable by Santa Fe in response to a
superior offer, and invalid under Delaware law, and joint and several damages
against the defendants as a result of their conduct.
On October 18, 1994, the Delaware Court of Chancery denied Union Pacific's
and the Santa Fe stockholder-plaintiffs' motions for expedited discovery. The
Court of Chancery, among other things, held that because the Santa Fe/BN Merger,
if approved by Santa Fe stockholders, could not be consummated for at least
eighteen months, the Court would have sufficient time to evaluate Union
Pacific's and the Santa Fe stockholder-plaintiffs' claims and, if necessary, set
aside the Santa Fe/BN Merger before any steps are taken to consummate it.
On October 19, 1994, Union Pacific filed its First Amended and Supplemental
Complaint, and was joined in that action as plaintiff by James A. Shattuck, an
officer of Union Pacific Railroad Company, a subsidiary of Union Pacific, who
also is a stockholder of Santa Fe. The First Amended and Supplemental Complaint
is styled Union Pacific Corporation and James A. Shattuck v. Santa Fe Pacific
Corporation, et. al., C.A. No. 13778. In addition to the claims stated and
relief sought in Union Pacific's original complaint, the First Amended and
Supplemental Complaint alleged, among other things, that Santa Fe and the
director defendants have breached their fiduciary duties of candor by joining BN
in a wrongful campaign to mislead
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Santa Fe's stockholders (via press releases and the Santa Fe Joint Proxy
Statement) into believing, among other things, that (i) Santa Fe cannot lawfully
consider the Union Pacific Proposal; (ii) the Union Pacific Proposal is illusory
and made solely for the purpose of preventing a merger of Santa Fe and
Burlington Northern; and (iii) a merger of Union Pacific and Santa Fe cannot
lawfully occur.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, telefax and in person. Union
Pacific has retained Morrow & Co., Inc. ("Morrow") for solicitation and advisory
services in connection with solicitations relating to the Special Meeting, for
which Morrow is to receive an initial proxy advisory retainer fee of $75,000 and
an additional fee of $500,000 in connection with the solicitation of proxies for
the Special Meeting. Union Pacific has also agreed to reimburse Morrow for its
reasonable out-of-pocket expenses and indemnify Morrow against certain
liabilities and expenses, including reasonable legal fees and related charges.
Morrow will solicit proxies for the Special Meeting from individuals, brokers,
banks, bank nominees and other institutional holders. Directors, officers and
employees of Union Pacific may assist in the solicitation of proxies without any
additional remuneration. The entire expense of soliciting proxies for the
Special Meeting by or on behalf of Union Pacific is being borne by Union
Pacific.
CS First Boston Corporation ("CS First Boston") is acting as financial
advisor to Union Pacific in connection with its effort to acquire Santa Fe.
Union Pacific has agreed to pay CS First Boston for its services an initial
financial advisory fee of $500,000, an additional financial advisory fee of $2
million (the "Additional Advisory Fee"), $1 million of which will become payable
on October 17, 1994 and the remaining $1 million of which will become payable on
December 31, 1994, an ongoing quarterly advisory fee of $125,000 payable during
the term of the engagement ("Quarterly Advisory Fees"), with the first payment
payable on March 31, 1995, and a transaction fee payable in connection with
Union Pacific's proposed acquisition of Santa Fe, determined based on the size
of such transaction, but in an amount not to exceed $12.5 million (the
"Transaction Fee"). Any portion of the Additional Advisory Fee and Quarterly
Advisory Fees paid prior to consummation of Union Pacific's acquisition of Santa
Fe will be fully credited against the Transaction Fee. Union Pacific has also
agreed to reimburse CS First Boston for its reasonable out-of-pocket expenses,
including the fees and expenses of its legal counsel, incurred in connection
with its engagement, and to indemnify CS First Boston and certain related
persons against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws. In
connection with CS First Boston's engagement as financial advisor, Union Pacific
anticipates that certain employees of CS First Boston may communicate in person,
by telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of Santa Fe for the purpose of assisting in
the solicitation of proxies for the Special Meeting. CS First Boston will not
receive any fee for or in connection with such solicitation activities apart
from the fees which it is otherwise entitled to receive as described above. CS
First Boston has rendered various investment banking and other advisory services
to Union Pacific and its affiliates in the past and is
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<PAGE> 16
expected to continue to render such services, for which it has received and will
continue to receive customary compensation from Union Pacific and its
affiliates.
CERTAIN INFORMATION ABOUT UNION PACIFIC
Union Pacific, incorporated in Utah, operates, through subsidiaries, in the
areas of rail transportation (Union Pacific Railroad Company and Missouri
Pacific Railroad Company (collectively, the "Railroad")), oil, gas and mining
(Union Pacific Resources Company ("Resources")), trucking (Overnite
Transportation Company ("Overnite")), and waste management (USPCI, Inc.
("USPCI")). Each of these subsidiaries is indirectly wholly-owned by Union
Pacific. Substantially all of Union Pacific's operations are in the United
States.
The Railroad is the third largest railroad in the United States by mileage,
with over 17,000 route miles linking West Coast and Gulf Coast ports with the
Midwest. The Railroad maintains coordinated schedules with other carriers for
the handling of freight to and from the Atlantic seaboard, the Pacific Coast,
the Southeast, the Southwest, Canada and Mexico. Export and import traffic is
moved through Gulf Coast and Pacific Coast ports and across the Texas-Mexico
border.
Resources is an independent oil and gas company engaged in exploration for
and production of natural gas, crude oil and associated products. Substantially
all of its exploration and production programs are concentrated in the Austin
Chalk trend and Carthage area in eastern Texas and Louisiana, the Union Pacific
Land Grant in Colorado, Wyoming and Utah, the Gulf of Mexico and Canada.
Resources is also responsible for developing Resources' reserves of coal and
trona which are located primarily in the Rocky Mountain region.
Overnite, a major interstate trucking company, serves all 50 states and
portions of Canada through 166 service centers and through agency partnerships
with several small, high-quality carriers serving areas not directly covered by
Overnite. As one of the largest trucking companies in the United States,
specializing in less-than-truckload shipments, Overnite transports a variety of
products, including machinery, textiles, plastics, electronics and paper
products.
USPCI provides comprehensive waste management services (analysis,
treatment, recovery, recycling, disposal, remediation and transportation) to
industry and government.
OTHER INFORMATION
The information concerning Santa Fe and the Santa Fe/BN Merger contained
herein has been taken from, or based upon, publicly available documents on file
with the Securities and Exchange Commission and other publicly available
information. Although Union Pacific has no knowledge that would indicate that
statements relating to Santa Fe or the Santa Fe/BN Merger contained in this
Proxy Statement in reliance
15
<PAGE> 17
upon publicly available information are inaccurate or incomplete, it has not to
date had access to the books and records of Santa Fe, was not involved in the
preparation of such information and statements and is not in a position to
verify any such information or statements. Accordingly, Union Pacific does not
take any responsibility for the accuracy or completeness of such information or
for any failure by Santa Fe to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
Reference is made to the Santa Fe Joint Proxy Statement for information
concerning the common stock of Santa Fe, the beneficial ownership of such stock
by the principal holders thereof, other information concerning Santa Fe's
management, the procedures for submitting proposals for consideration at the
next annual meeting of stockholders of Santa Fe and certain other matters
regarding Santa Fe and the Special Meeting. Union Pacific assumes no
responsibility for the accuracy or completeness of any such information.
Union Pacific is not aware of any other matter to be considered at the
Special Meeting. However, if any other matter properly comes before the Special
Meeting, Union Pacific will vote all proxies held by it as Union Pacific, in its
sole discretion, may determine.
PLEASE SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY TODAY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. BY SIGNING AND MAILING THE ENCLOSED
GOLD PROXY, ANY PROXY PREVIOUSLY SIGNED BY YOU RELATING TO THE SUBJECT MATTER
HEREOF WILL BE AUTOMATICALLY REVOKED.
UNION PACIFIC CORPORATION
Dated October , 1994
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<PAGE> 18
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF UNION PACIFIC
AND CERTAIN EMPLOYEES AND OTHER
REPRESENTATIVES OF UNION PACIFIC
The following table sets forth the name and title of persons who may be
deemed to be participants on behalf of Union Pacific in the solicitation of
proxies from stockholders of Santa Fe. Unless otherwise indicated, the principal
business address of each director, executive officer, employee or representative
is Martin Tower, Eighth and Eaton Avenues, Bethlehem, Pennsylvania 18018.
DIRECTORS AND EXECUTIVE OFFICERS OF UNION PACIFIC
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION
- ------------------------------------- ------------------------------------------------------
<S> <C>
Robert P. Bauman..................... Director.
SmithKline Beecham Consumer
Healthcare
1500 Littleton Road
Parsippany, NJ 07054
Charles E. Billingsley............... Vice President and Controller of Union Pacific.
Richard B. Cheney.................... Director.
American Enterprise Institute
1150 17th Street, NW
Suite 1100
Washington, DC 20036
E. Virgil Conway..................... Director.
101 Park Avenue
31st Floor
New York, NY 10178
Richard K. Davidson.................. Director, President of Union Pacific.
Union Pacific Corporation
1416 Dodge Street
Omaha, NE 68179
John E. Dowling...................... Vice President -- Corporate Development of Union
Pacific.
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION
- ------------------------------------- ------------------------------------------------------
<S> <C>
Spencer F. Eccles.................... Director.
First Security Corporation
P.O. Box 30006
Salt Lake City, UT 84130
Ursula F. Fairbairn.................. Senior Vice President -- Human Resources of Union
Pacific.
Elbridge T. Gerry, Jr. .............. Director.
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
William H. Gray, III................. Director.
United Negro College Fund, Inc.
8260 Willow Oaks Corporate Drive
P.O. Box 10444
Fairfax, VA 22031
John B. Gremillion, Jr. ............. Vice President -- Taxes of Union Pacific.
Judith Richards Hope................. Director.
Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Avenue, N.W.
Tenth Floor
Washington, DC 20004
Lawrence M. Jones.................... Director.
The Coleman Company, Inc.
250 N. St. Francis Street
P.O. Box 1762
Wichita, KS 67201
Drew Lewis........................... Director, Chairman and Chief Executive Officer of
Union Pacific.
Richard J. Mahoney................... Director.
Monsanto Company
800 N. Lindbergh Boulevard
St. Louis, MO 63167
Claudine B. Malone................... Director.
Financial & Management Consulting,
Inc.
7570 Potomac Fall Road
McLean, VA 22102
L. White Matthews, III............... Director, Executive Vice President -- Finance of Union
Pacific.
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION
- ------------------------------------- ------------------------------------------------------
<S> <C>
Mary E. McAuliffe.................... Vice President -- External Relations of Union Pacific.
555-13th Street, N.W.
Suite 450W
Washington, DC 20004
Jack L. Messman...................... Director.
Union Pacific Resources Company
801 Cherry Street
Fort Worth, TX 76102
John R. Meyer........................ Director.
Center for Business and Government
Harvard University
79 Kennedy Street
Cambridge, MA 02138
Thomas A. Reynolds, Jr. ............. Director.
Winston & Strawn
35 West Wacker Drive
Suite 4700
Chicago, IL 60601
James D. Robinson, III............... Director.
J. D. Robinson Inc.
126 East 56th Street
26th Floor
New York, NY 10022
Robert W. Roth....................... Director.
P.O. Box 1219
Pebble Beach, CA 93953
Gary F. Schuster..................... Vice President -- Corporate Relations of Union
Pacific.
Richard D. Simmons................... Director.
International Herald Tribune
1150 15th Street, NW
Washington, DC 20071
Gary M. Stuart....................... Vice President and Treasurer of Union Pacific.
Judy L. Swantak...................... Vice President and Corporate Secretary of Union
Pacific.
Carl W. von Bernuth.................. Senior Vice President and General Counsel of Union
Pacific.
</TABLE>
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<PAGE> 21
CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES
OF UNION PACIFIC WHO MAY ALSO SOLICIT PROXIES
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION
- ----------------------------------- --------------------------------------------------------
<S> <C>
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.
Richard H. Bott.................... Managing Director at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
David A. DeNunzio.................. Managing Director at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
Gerald M. Lodge.................... Managing Director at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
Stephen C. Month................... Director at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
Scott R. White..................... Associate at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
NAME AND PRINCIPAL
BUSINESS ADDRESS POSITION
- ----------------------------------- --------------------------------------------------------
<S> <C>
Samuel H. Schwartz................. Associate at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
Caroline P. Sykes.................. Analyst at CS First Boston.
CS First Boston
55 East 52nd Street
New York, NY 10055
</TABLE>
In the normal course of its business, CS First 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 , 1994, CS First Boston held a short position
of shares of Santa Fe common stock.
SHARES HELD BY UNION PACIFIC, ITS DIRECTORS AND EXECUTIVE OFFICERS
Union Pacific is the beneficial holder of 200 shares of Santa Fe common
stock 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.
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<PAGE> 23
ADDITIONAL INFORMATION
If your shares of Santa Fe common stock are held in the name of a bank or
broker, only your bank or broker can vote your shares of Santa Fe common stock
and only upon receipt of your specific instructions. Please instruct your bank
or broker to execute the GOLD proxy card today. If you have any questions or
require any assistance in voting your shares of Santa Fe common stock, please
call:
MORROW & CO., INC.
Call Toll Free: (800) 856-8309
909 Third Avenue
New York, New York 10022
In New York City, call: (212) 754-8000
22
<PAGE> 24
SANTA FE PACIFIC CORPORATION
IN OPPOSITION TO THE PROPOSED
MERGER OF SANTA FE CORPORATION AND
BURLINGTON NORTHERN INC.
THIS PROXY IS SOLICITED ON BEHALF OF
UNION PACIFIC CORPORATION
PROXY
SPECIAL MEETING OF STOCKHOLDERS OF SANTA FE PACIFIC CORPORATION
The undersigned hereby appoints DREW LEWIS and JUDY L. SWANTAK as
proxies, each with the power to appoint a substitute, and hereby authorizes
them to represent and to vote all shares of stock of Santa Fe Pacific
Corporation, a Delaware corporation ("Santa Fe"), which the undersigned is
entitled to vote at the special meeting of stockholders of Santa Fe, scheduled
to be held on November 18, 1994, called for the purpose of considering the
proposed merger of Santa Fe with and into Burlington Northern Inc., a Delaware
corporation ("BN")(such proposed merger, the "Santa Fe/BN Merger"), or any
adjournment(s), postponement(s), or rescheduling(s) thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED AGAINST THE SANTA FE/BN
MERGER. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE SPECIAL MEETING,
THIS PROXY WILL BE VOTED ON SUCH MATTERS AS UNION PACIFIC CORPORATION, IN ITS
SOLE DISCRETION, MAY DETERMINE.
(Continued and to be dated and signed on reverse side.)
<PAGE> 25
1. The Santa Fe/BN Merger.
Union Pacific strongly recommends a vote "AGAINST" the Santa
Fe/BN Merger.
/ / AGAINST / / FOR / / ABSTAIN
The undersigned hereby acknowledges receipt of the Union Pacific
Corporation Proxy Statement dated October __, 1994 soliciting proxies in
opposition to the Santa Fe/BN Merger. The undersigned hereby revokes any
proxies heretofore given by the undersigned relating to the subject matter
hereof and confirms all that the Proxies may lawfully do by virtue hereof.
DATE:_____________________________, 1994
________________________________________
(Signature)
________________________________________
(Signature if jointly held)
Title:__________________________________
Please sign exactly as name appears
hereon. When signing as an
attorney, executor, administrator,
trustee or guardian, please give
full title as such.
PLEASE SIGN, DATE AND MAIL PROMPTLY IN THE POSTAGE-PAID
ENVELOPES ENCLOSED.
