SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT
(AMENDMENT NO. 9)
PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
AMENDMENT NO. 19
TO
SCHEDULE 13D
CONRAIL INC.
(NAME OF SUBJECT COMPANY)
CSX CORPORATION
GREEN ACQUISITION CORP.
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
208368 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
SERIES A ESOP CONVERTIBLE JUNIOR PREFERRED STOCK, WITHOUT PAR VALUE
(TITLE OF CLASS OF SECURITIES)
NOT AVAILABLE
(CUSIP NUMBER OF CLASS OF SECURITIES)
MARK G. ARON
CSX CORPORATION
ONE JAMES CENTER
901 EAST CARY STREET
RICHMOND, VIRGINIA 23219-4031
(804) 782-1400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
WITH A COPY TO:
PAMELA S. SEYMON
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 403-1000<PAGE>
This Statement amends and supplements the Tender Of-
fer Statement on Schedule 14D-1 filed with the Securities and
Exchange Commission on December 6, 1996, as previously amended
and supplemented, by Green Acquisition Corp., a Pennsylvania
corporation and a wholly owned subsidiary of CSX Corporation, a
Virginia corporation, to purchase up to an aggregate of
18,344,845 shares of (i) Common Stock, par value $1.00 per
share, and (ii) Series A ESOP Convertible Junior Preferred
Stock, without par value, of Conrail Inc., a Pennsylvania cor-
poration, including, in each case, the associated Common Stock
Purchase Rights, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated December 6, 1996, as
supplemented by the Supplement thereto, dated December 19,
1996, and the related Letters of Transmittal at a purchase
price of $110.00 per Share, net to the tendering shareholder in
cash. Capitalized terms used and not defined herein shall have
the meanings assigned such terms in the Offer to Purchase, the
Supplement and the Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
(b), (e) On January 9, 1997, the STB delivered its
decision, dated January 8, 1997, rejecting NSC's Petition for
Declaratory Order as premature. A copy of such decision is
attached as Exhibit (c)(9), and the foregoing summary descrip-
tion is qualified in its entirety by reference to such exhibit.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(c)(9) Text of STB Decision No. 5 of STB Finance Docket No.
33220, dated January 8, 1997.
(c)(10) Unaudited Pro Forma Financial Statements reflecting
the Transactions (incorporated by reference to
Parent's registration statement on Form S-4, regis-
tration number 333-19523 (the "Registration State-
ment")).<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
CSX CORPORATION
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: Executive Vice President
-- Law and Public Affairs
Dated: January 10, 1997<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge
and belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct.
GREEN ACQUISITION CORP.
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: General Counsel and
Secretary
Dated: January 10, 1997<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
*(a)(1) Offer to Purchase, dated December 6, 1996.
*(a)(2) Letter of Transmittal.
*(a)(3) Notice of Guaranteed Delivery.
*(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
*(a)(5) Letter to Clients for use by Brokers, Dealers, Com-
mercial Banks, Trust Companies and Other Nominees.
*(a)(6) Guidelines for Certification of Taxpayer Identifica-
tion Number on Substitute Form W-9.
*(a)(7) Tender Offer Instructions for Participants of Conrail
Inc. Dividend Reinvestment Plan.
*(a)(8) Text of Press Release issued by Parent and the Com-
pany on December 6, 1996.
*(a)(9) Form of Summary Advertisement, dated December 6,
1996.
*(a)(10) Text of Press Release issued by Parent on December 5,
1996.
*(a)(11) Text of Press Release issued by Parent and the Com-
pany on December 10, 1996.
*(a)(12) Text of Advertisement published by Parent and the
Company on December 10, 1996.
*(a)(13) Text of Press Release issued by Parent on December
11, 1996.
*(a)(14) Text of Advertisement published by Parent and the
Company on December 12, 1996.
*(a)(15) Supplement to Offer to Purchase, dated December 19,
1996.
_____________________
* Previously filed.<PAGE>
*(a)(16) Revised Letter of Transmittal.
*(a)(17) Revised Notice of Guaranteed Delivery.
*(a)(18) Text of Press Release issued by Parent and the Com-
pany on December 19, 1996.
*(a)(19) Letter from Parent to shareholders of the Company,
dated December 19, 1996.
*(a)(20) Text of Press Release issued by Parent on December
20, 1996.
*(a)(21) Text of Press Release issued by Parent and the Com-
pany on January 9, 1997.
*(b)(1) Credit Agreement, dated November 15, 1996 (incorpo-
rated by reference to Exhibit (b)(2) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996.)
*(c)(1) Agreement and Plan of Merger, dated as of October 14,
1996, by and among Parent, Purchaser and the Company
(incorporated by reference to Exhibit (c)(1) to Par-
ent and Purchaser's Tender Offer Statement on Sched-
ule 14D-1, as amended, dated October 16, 1996).
*(c)(2) Company Stock Option Agreement, dated as of October
14, 1996, between Parent and the Company (incorpo-
rated by reference to Exhibit (c)(2) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996).
*(c)(3) Parent Stock Option Agreement, dated as of October
14, 1996, between Parent and the Company (incorpo-
rated by reference to Exhibit (c)(3) to Parent and
Purchaser's Tender Offer Statement on Schedule 14D-1,
as amended, dated October 16, 1996).
*(c)(4) Voting Trust Agreement, dated as of October 15, 1996,
by and among Parent, Purchaser and Deposit Guaranty
National Bank (incorporated by reference to Exhibit
(c)(4) to Parent and Purchaser's Tender Offer State-
ment on Schedule 14D-1, as amended, dated October 16,
1996).
_____________________
* Previously filed.
- 2 -<PAGE>
*(c)(5) First Amendment to Agreement and Plan of Merger,
dated as of November 5, 1996, by and among Parent,
Purchaser and the Company (incorporated by reference
to Exhibit (c)(7) to Parent and Purchaser's Tender
Offer Statement on Schedule 14D-1, as amended, dated
October 16, 1996).
*(c)(6) Second Amendment to Agreement and Plan of Merger,
dated as of December 18, 1996, by and among Parent,
Purchaser and the Company.
*(c)(7) Form of Amended and Restated Voting Trust Agreement.
(c)(8) Deleted.
(c)(9) Text of STB Decision No. 5 of STB Finance Docket No.
33220, dated January 8, 1997.
(c)(10) Unaudited Pro Forma Financial Statements reflecting
the Transactions (incorporated by reference to
Parent's registration statement on Form S-4, regis-
tration number 333-19523).
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
_____________________
* Previously filed.
- 3 -
EXHIBIT (c)(9)
SERVICE DATE - JANUARY 9, 1997
SURFACE TRANSPORTATION BOARD
DECISION
STB Finance Docket No. 33220
CSX CORPORATION AND CSX TRANSPORTATION, INC.
--CONTROL AND MERGER--
CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION
[Decision No. 5]
Decided: January 8, 1997
BACKGROUND
On October 18, 1996, CSX Corporation (CSXC), CSX
Transportation, Inc. (CSXT),1 Conrail Inc. (CRI), and Consoli-
dated Rail Corporation (CRC)2 (collectively, applicants) filed
a notice of intent (CSX/CR-1) to file an application (hereinaf-
ter referred to as the primary application) seeking Board au-
thorization under 49 U.S.C. 11323-25 for: (1) the acquisition
of control of CRI by Green Acquisition Corp. (Acquisition), a
wholly owned subsidiary of CSXC; (2) the merger of CRI into
Acquisition; and (3) the resulting common control of CSXT and
CRC by CSXC. Applicants indicate that they expect to file
their primary application, and any related applications, on or
before March 1, 1997.3
_____________________
1 CSXC and CSXT are referred to collectively as CSX.
2 CRI and CRC are referred to collectively as Conrail.
3 Decision No. 1, served October 25, 1996, granted ap-
plicants' request for a protective order. Decision No. 2,
served and published in the Federal Register (61 FR 58613) on
November 15, 1996, gave notice to the public of applicants'
CSX/CR-1 pre-filing notification, and found that the transac-
tion proposed by applicants is a "major" transaction, as de-
fined at 49 CFR 1180.2(a). Decision No. 3, served and pub-
lished in the Federal Register (61 FR 58611) on November 15,
1996, invited comments from interested persons on a proposed
procedural schedule. Decision No. 4, served December 13, 1996,
assigned this proceeding to Administrative Law Judge Jacob Lev-
enthal for the handling of all discovery matters and the ini-
(continued...)<PAGE>
CSXC, Acquisition, and CRI entered into an Agreement
and Plan of Merger (the Merger Agreement) dated October 14,
1996, which they amended on November 5, 1996, and further
amended on December 18, 1996.4 On December 27, 1996, Norfolk
Southern Corporation and Norfolk Southern Railway Company (col-
lectively, NS) filed a petition for declaratory order that
CSXC, CSXT, and Acquisition are in violation of 49 U.S.C. 11323
by reason of a "lock-out provision" in Section 4.2 of the
Merger Agreement, as amended on December 18, 1996, and that the
amendment to Section 4.2 is void and unenforceable.5
_____________________
3(continued...)
tial resolution of all discovery disputes.
We will address, in a separate decision, applicants' CSX/
CR-6 petition for waiver or clarification of certain railroad
consolidation procedures, and for related relief, filed on De-
cember 27, 1996.
4 The Merger Agreement, as first entered into, envisioned:
(1) the acquisition by Acquisition of approximately 19.9% of
the common stock of CRI; (2) the acquisition by Acquisition of
an additional approximately 20.1% of the common stock of CRI;
and (3) after Board approval of the primary application, the
merger of CRI with and into Acquisition. As amended, however,
the Merger Agreement now envisions that the merger of CRI with
and into Acquisition will occur prior to Board approval of the
primary application. This change means that applicants no
longer seek Board authorization for the acquisition of control
of CRI by Acquisition, or for the merger of CRI into Acquisi-
tion. Applicants, however, continue to seek Board authoriza-
tion for the common control, by CSXC, of CSXT and CRC. Ap-
plicants continue to indicate that they expect to file their
primary application, and any related applications, on or before
March 1, 1997.
5 NS requests expedited consideration of its petition for
declaratory order. NS alternatively requests that, if the
Board is unable to reach a decision on the question of unlawful
control substantially before January 17, 1997, it should issue
a temporary cease and desist order barring Conrail from holding
the shareholder meeting now scheduled for January 17, 1997, or
barring CSX from requiring the trustee under CSX's voting trust
to vote any Conrail shares held in the voting trust in favor of
opting out of Subchapter 25E of the Pennsylvania Business Cor-
poration Act or in favor of a CSX/Conrail merger, until the
(continued...)
<PAGE>
On December 30, 1996, CSX and Conrail respectively
filed letters notifying the Board of their objection to NS'
request for expedited consideration, and of their intent to
file responses to NS' petition for declaratory order within the
time provided by the Board's rules.
We are granting NS' request for expedited consider-
ation, and will deny its petition for declaratory order at this
time, as we discuss further below.
DISCUSSION AND CONCLUSIONS
Section 4.2 of the Merger Agreement. Section 4.2 of
the Merger Agreement (hereinafter, the "lock-out provision")
prohibits Conrail's management for a specified period from tak-
ing various actions with respect to any proposal by any entity
other than CSX to acquire more than 50 percent of the assets or
voting stock of Conrail (defined in the agreement as a "Take-
over Proposal"). Section 4.2(a) provides that Conrail may not
"(i) solicit, initiate or encourage (including by way of fur-
nishing information) or take any other action designed to fa-
cilitate, directly and indirectly, any inquiries or the making
of any proposal which constitutes any Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any
Takeover Proposal . . . ." Section 4.2(b) prohibits Conrail's
board of directors for a specified period from (1) withdrawing
or modifying its approval or recommendation that shareholders
approve the CSX/Conrail merger agreement, (2) approving or rec-
ommending any merger agreement with any party other than CSX,
or (3) entering into any letter of intent or merger agreement
related to any Takeover Proposal.
_____________________
5(continued...)
Board is able to decide the question. See Pa. Stat. Ann., tit.
15, Sections 2541 through 2548 (West 1995). Without such opt-
out, CSX would be required to purchase all Conrail shares for
the same cash price as it paid for the first 19.9 percent
(Merger Agreement, Section 5.1(b)). Because we are issuing
this decision in advance of the January 17, 1997 shareholder
meeting, this alternative request for relief is moot.
<PAGE>
Under the original Merger Agreement, Conrail was per-
mitted to negotiate with respect to other unsolicited takeover
proposals after April 12, 1997, if Conrail's board concluded,
on advice of counsel, that their fiduciary duties required them
to do so. The original Merger Agreement also permitted Conrail
to enter into a letter of intent or agreement with another
party after April 12, 1997, if Conrail's board concluded that
the other party's proposal was superior to CSX's and that CSX
was unlikely to acquire 40% of Conrail's stock. In the first
amendment (November 5, 1996), the lock-out period was extended
90 days to July 12, 1997. The second amendment (December 18,
1996) extends the lock-out period to December 31, 1998. (Sec-
ond Amendment at 18.)
NS' Arguments. NS states that it wishes to acquire
Conrail and is prepared to pay Conrail's shareholders substan-
tially more than CSX is willing to pay; however, provisions of
the Merger Agreement have prevented NS from reaching an agree-
ment, or even discussing NS' proposal, with Conrail's manage-
ment.6 NS challenges the second amendment to the extent that
it prohibits Conrail, without CSX's consent, from entering into
a merger agreement with any other company, or even discussing
such an agreement with any other company, until 1999, even if
Conrail shareholders vote in the next few months to disapprove
the proposed CSX merger and even if the Board issues a decision
in 1997 refusing to approve that merger.
NS makes three main arguments: (1) by the amended
lock-out provision, CSX has acquired unlawful control of
Conrail in violation of 49 U.S.C. 11323;7 (2) the lock-out
_____________________
6 On December 19, 1996, NS increased its all-cash offer for
all of Conrail's outstanding shares to $115 per share. Accord-
ing to NS, its offer would provide Conrail shareholders other
than CSX almost $16 per share more than the blended value of
cash and securities that CSX is offering current Conrail share-
holders for their shares, based on the market price of CSX com-
mon stock at closing on December 26, 1996. On that basis, NS
estimates that the total amount it is offering to Conrail
shareholders other than CSX is approximately $1.16 billion more
than what CSX is offering.
7 Under 49 U.S.C. 11323 (formerly 49 U.S.C. 11343), certain
transactions may be carried out only with the prior approval
and authorization of this Board. These include "[a]cquisition
of control of a rail carrier by any number of rail carriers,"
"[a]cquisition of control of at least two carriers by a person
that is not a rail carrier," and "[a]cquisition of control of a
(continued...)
<PAGE>
restraint cannot be justified as reasonably related to CSX's
desire to preserve the status quo pending corporate and regula-
tory approval; and (3) CSX's unlawful control threatens NS and
Conrail's stockholders with immediate irreparable injury which
the Board must act to prevent. NS also asserts that, to the
extent the lock-out provision precludes Conrail from developing
more competitive and innovative services through a combination
with NS, the provision shields CSX from increased competition
from its two main competitors.8
Our Analysis. We note that NS has challenged the
legality of the amended lock-out provision, as well as other
provisions of the CSX/Conrail merger agreement, in an action
pending in the United States District Court for the Eastern
District of Pennsylvania with claims based on the Pennsylvania
corporation laws and the fiduciary duties of Conrail's board of
directors. Contrary to NS' assertion that the amended lock-out
provision involves an issue of illegal control under 49 U.S.C.
11323 that the Board must address and enforce independently of
any issue of state law, we do not find that NS' request is ripe
for our consideration, as discussed further below.
NS argues that CSX will unlawfully control Conrail
because the lock-out will remain in effect until December 31,
1998, even if the Conrail stockholders vote not to approve the
proposed CSX/Conrail merger,9 and even if the Board disapproves
the CSX/Conrail merger before the lock-out period expires or
imposes conditions unacceptable to the applicants. Conrail has
pointed out, however, in its December 30 letter, that NS' case
is founded on the uncertainty of future events, rather than on
any actual controversy or complaint, and we agree.
_____________________
7(continued...)
rail carrier by a person that is not a rail carrier but that
controls any number of rail carriers." 49 U.S.C. 11323(a)(3),
(4) and (5).
8 CSX and Conrail compete throughout large areas of the
Northeast and Midwest, and NS and CSX compete throughout the
Southeast and Midwest.
9 CSX and Conrail expect that vote to take place before
March 31, 1997.
<PAGE>
NS acknowledges that a rationale for permitting such
an agreement (prior to Board approval) would be to provide a
reasonable period of time for parties to an agreement to deter-
mine whether their shareholders and their regulators will ap-
prove the transaction. NS argues, however, that the lock-out
period here is too long because it goes beyond what may be rea-
sonably expected for the Board to consider and act upon the
consolidation application of the two railroads themselves, and
because it may extend beyond other actions (such as a share-
holder vote rejecting the merger) that effectively foreclose
the possibility of the transaction taking place as proposed.
NS' argument that the amendment increases CSX's control over
Conrail is based on the extension of the termination date of
the lock-out period by an additional 18 months -- from July 12,
1997, to December 11, 1998. While the now 2-year lock-out pe-
riod appears excessive on the face, we do not find the extended
termination date, in and of itself, to be unreasonable at this
time, given the complicated and controversial matters facing
the parties concerning the proposed control transaction, and
given that provision's lack of any meaningful constraint on our
jurisdiction as discussed below.
As for NS' concern that CSX will be able to use un-
lawful control afforded by the lock-out provision to coerce a
critical vote of Conrail shareholders scheduled for January 17,
1997, by portraying CSX as the only choice available to them,
and effectively preclude the possibility of NS' offer from be-
ing realized, we believe that the Conrail shareholders are
aware of their choices in this highly public controversy, and
can pursue legal remedies if they believe that their board of
directors breached its fiduciary duty. NS protests the
agreement between CSX and Conrail's board of directors to amend
the Merger Agreement to preclude Conrail and CSX from pursuing
other transactions without the consent of the other through
December 31, 1998. We find that voiding or overriding the
amendment at this time is premature.
As discussed above, we find that NS' petition for
relief is premature and unwarranted at this time. We advise
the parties, however, that, if a CSX/Conrail merger application
is filed, we may exercise our 49 U.S.C. 11324(e) conditioning
power to impose certain conditions and/or grant any inconsis-
tent or responsive applications that are found to be in the
public interest. We emphasize that, under those circumstances,
the preemptive immunizing force of 49 U.S.C. 11321(a) can pre-
empt contractual rights, including those resulting from the
lock-out provision, if necessary to permit a Board-approved
transaction to go forward. See Norfolk & Western R. Co. v.
Train Dispatchers, 499 U.S. 117 (1991) (Dispatchers) (the im-
munity provision, which provides that a carrier, corporation,
<PAGE>
or person participating in a transaction that is approved under
49 U.S.C. 11324 (old 49 U.S.C. 11344) is "exempt from the anti-
trust laws and from all other law, including State and munici-
pal law, as necessary to let that person carry out the transac-
tion," extends not only to laws but also to contracts). A per-
son cannot effectively preclude our approval of a transaction
from going forward simply by entering into a contract that pur-
ports to prevent all alternatives to its own preferred outcome.
Thus, the lock-out provision would in no way preclude Board
approval, as appropriate, of an NS/Conrail merger proposal, or
any other Conrail merger proposal, or the consummation of such
a merger, if approved.
This decision will not significantly affect either
the quality or the human environment or the conservation of
energy resources.
It is ordered:
1. NS' petition for declaratory order is denied.
2. This decision is effective on the date of ser-
vice.
By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams
Secretary
