<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1/A
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 3)
----------------
SANTA FE PACIFIC CORPORATION
(NAME OF SUBJECT COMPANY)
BURLINGTON NORTHERN INC.
(BIDDER)
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
802183 1 03
(CUSIP NUMBER OF CLASS OF SECURITIES)
EDMUND W. BURKE, ESQ.
EXECUTIVE VICE PRESIDENT, LAW AND SECRETARY
BURLINGTON NORTHERN INC.
3800 CONTINENTAL PLAZA
777 MAIN STREET
FORT WORTH, TEXAS 76102-5384
(817) 333-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
DAVID L. CAPLAN, ESQ.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
DECEMBER 23, 1994
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
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<PAGE>
This Amendment No. 3 amends and supplements the Tender Offer Statement on
Schedule 14D-1 dated December 23, 1994 (the "Statement") of Burlington Northern
Inc., a Delaware corporation (the "Bidder"), as amended and supplemented by
Amendment No. 1 and Amendment No. 2 thereto, relating to an offer by the Bidder
to purchase up to 25,000,000 outstanding shares of Common Stock, par value
$1.00 per share (the "Shares"), of Santa Fe Pacific Corporation, a Delaware
corporation (the "Company"), at $20.00 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated December 23, 1994 (the "Original Offer to Purchase"), as amended and
supplemented by the Supplement dated January 13, 1995 (the "First Supplement"
and, together with the Original Offer to Purchase, the "Offer to Purchase"),
and as further amended and supplemented by the Supplement dated January 25,
1995 (the "Second Supplement"), and in the related Letter of Transmittal (which
collectively constitute the "Offer"). Capitalized terms not separately defined
herein shall have the meanings specified in the Statement.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3(b) of the Statement is hereby amended and supplemented by the
following:
The information set forth in the "Introduction," "Amendment No. 3 to
Merger Agreement," "Additional Recent Developments" and "Certain Additional
Information" sections, as well as "Appendix A--Amendment No. 3 to Agreement
and Plan of Merger," of the Second Supplement, a copy of which is attached
hereto as Exhibit (a)(10), is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Item 5(a)-(e) of the Statement is hereby amended and supplemented by the
following:
The information set forth in the "Introduction," "Amendment No. 3 to
Merger Agreement," "Additional Recent Developments," "Recommendation of SFP
Board of Directors" and "Certain Additional Information" sections, as well
as "Appendix A--Amendment No. 3 to Agreement and Plan of Merger," of the
Second Supplement is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Item 7 of the Statement is hereby amended and supplemented by the following:
The information set forth in the "Additional Recent Developments" section
of the Second Supplement is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10(a) of the Statement is hereby amended and supplemented by the
following:
The information set forth in the "Introduction," "Amendment No. 3 to
Merger Agreement" and "Additional Recent Developments" sections, as well as
"Appendix A--Amendment No. 3 to Agreement and Plan of Merger," of the
Second Supplement is incorporated herein by reference.
Item 10(b) and Item 10(e) of the Statement are each hereby amended and
supplemented by the following:
The information set forth in the "Certain Additional Information" section
of the Second Supplement is incorporated herein by reference.
Item 10(f) of the Statement is hereby amended and supplemented by the
following:
The information set forth in Second Supplement is incorporated herein by
reference in its entirety.
On January 24, 1995, the Bidder and the Company issued the joint press
release attached hereto as Exhibit (a)(11). The information set forth in
the press release is incorporated herein by reference.
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(10) Form of Supplement dated January 25, 1995 to the Offer to Purchase
dated December 23, 1994 (as amended and supplemented by the Supplement
dated January 13, 1995).
(a)(11) Joint Press Release dated January 24, 1995.
(a)(12) Text of advertisement issued by Bidder on January 24, 1995.
(c)(2) Letter Agreement dated January 24, 1995 among the Company, the Bidder
and Alleghany Corporation.
(c)(3) Letter Agreement dated January 24, 1995 among the Company, the Bidder
and George McFadden.
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
/s/ Edmund W. Burke
By _____________________________________
Name:Edmund W. Burke
Title: Executive Vice President, Law
and Secretary
Dated: January 25, 1995
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ------------
<C> <S> <C>
(a)(10) Form of Supplement dated January 25, 1995 to the
Offer to Purchase dated December 23, 1994 (as
amended and supplemented by the Supplement dated
January 13, 1995).
(a)(11) Joint Press Release dated January 24, 1995.
(a)(12) Text of advertisement issued by Bidder on January
24, 1995.
(c)(2) Letter Agreement dated January 24, 1995 among the
Company, the Bidder and Alleghany Corporation.
(c)(3) Letter Agreement dated January 24, 1995 among the
Company, the Bidder and George McFadden.
</TABLE>
<PAGE>
SUPPLEMENT TO THE OFFER TO PURCHASE DATED DECEMBER 23, 1994,
AS SUPPLEMENTED ON JANUARY 13, 1995
IMPORTANT NOTICE TO STOCKHOLDERS OF
SANTA FE PACIFIC CORPORATION
BURLINGTON NORTHERN INC.
AND
SANTA FE PACIFIC CORPORATION
HEREBY SUPPLEMENT THE OFFER TO PURCHASE FOR CASH
UP TO 63,000,000 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
SANTA FE PACIFIC CORPORATION
AT
$20.00 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, FEBRUARY 8, 1995, UNLESS FURTHER EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 63,000,000
SHARES OF SANTA FE PACIFIC CORPORATION COMMON STOCK BEING VALIDLY TENDERED AND
NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"),
(2) SANTA FE PACIFIC CORPORATION ("SANTA FE") AND BURLINGTON NORTHERN INC.
("BURLINGTON NORTHERN") HAVING OBTAINED SUFFICIENT FINANCING ON TERMS
SATISFACTORY TO THEM TO PURCHASE 63,000,000 SHARES PURSUANT TO THE OFFER AND
(3) APPROVAL OF THE MERGER REFERRED TO BELOW BY THE STOCKHOLDERS OF SANTA FE
AND BURLINGTON NORTHERN. SANTA FE AND BURLINGTON NORTHERN DO NOT INTEND TO
WAIVE THE MINIMUM CONDITION. THE OFFER IS NOT CONDITIONED ON RECEIPT OF
INTERSTATE COMMERCE COMMISSION APPROVAL OF THE MERGER. SEE "THE TENDER OFFER--
14. CONDITIONS OF THE OFFER" OF THE OFFER TO PURCHASE DATED DECEMBER 23, 1994.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER
BETWEEN BURLINGTON NORTHERN AND SANTA FE, AS AMENDED, PURSUANT TO WHICH SANTA
FE WILL MERGE WITH BURLINGTON NORTHERN (THE "MERGER"). THE BOARD OF DIRECTORS
OF SANTA FE HAS UNANIMOUSLY APPROVED THE OFFER AND THE MERGER AND RECOMMENDS
THAT THOSE SANTA FE STOCKHOLDERS WHO WISH TO RECEIVE CASH FOR A PORTION OF
THEIR SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES. THE OFFER IS BEING
EFFECTED TO FACILITATE THE MERGER. SEE "RECOMMENDATION OF SFP BOARD OF
DIRECTORS."
----------------
Questions and requests for assistance or additional copies of the Offer to
Purchase dated December 23, 1994, the Supplement dated January 13, 1995, this
Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to any of the Information Agents or either of the Dealer
Managers at their respective addresses and telephone numbers set forth on the
back cover of this Supplement. Additional copies of the Offer to Purchase
dated December 23, 1994, the Supplement dated January 13, 1995, this
Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery
may also be obtained from brokers, dealers, commercial banks or trust
companies.
----------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO. LAZARD FRERES & CO.
----------------
The date of this Supplement is January 25, 1995.
<PAGE>
To the Holders of Common Stock of
Santa Fe Pacific Corporation:
INTRODUCTION
The following information supplements and amends the Offer to Purchase dated
December 23, 1994 (the "Original Offer to Purchase"), as supplemented on
January 13, 1995 (the "First Supplement" and, together with the Original Offer
to Purchase, the "Offer to Purchase"), of Burlington Northern Inc., a Delaware
corporation ("BNI"), and Santa Fe Pacific Corporation, a Delaware corporation
("SFP" and, together with BNI, the "Purchasers"), pursuant to which the
Purchasers are severally offering to purchase up to 63,000,000 shares in the
aggregate of the outstanding shares of common stock, par value $1.00 per share,
of SFP (the "SFP Common Stock," including the associated preferred share
purchase rights), upon the terms and subject to the conditions set forth in the
Offer to Purchase, as amended by this Supplement, and in the related Letter of
Transmittal (which collectively constitute the "Offer").
The Purchasers have supplemented the Offer with the information contained
herein. This supplement should be read in conjunction with the Offer to
Purchase.
The Offer, proration period and withdrawal rights expire at 12:00 Midnight,
New York City time on Wednesday, February 8, 1995, unless further extended. The
Purchasers may extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any shares of SFP
Common Stock by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT LEAST 63,000,000
SHARES OF SFP COMMON STOCK BEING VALIDLY TENDERED AND NOT WITHDRAWN BEFORE THE
EXPIRATION OF THE OFFER (THE "MINIMUM CONDITION"), (2) SFP AND BNI HAVING
OBTAINED SUFFICIENT FINANCING ON TERMS SATISFACTORY TO THEM TO PURCHASE
63,000,000 SHARES PURSUANT TO THE OFFER AND (3) APPROVAL OF THE MERGER REFERRED
TO BELOW BY THE STOCKHOLDERS OF SFP AND BNI. THE PURCHASERS DO NOT INTEND TO
WAIVE THE MINIMUM CONDITION. THE OFFER IS NOT CONDITIONED ON INTERSTATE
COMMERCE COMMISSION ("ICC") APPROVAL OF THE MERGER. SEE "THE TENDER OFFER--14.
CONDITIONS OF THE OFFER" OF THE ORIGINAL OFFER TO PURCHASE.
THE BOARD OF DIRECTORS OF SFP HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER AND RECOMMENDS THAT THOSE SFP STOCKHOLDERS WHO WISH TO RECEIVE CASH FOR
A PORTION OF THEIR SHARES OF SFP COMMON STOCK ACCEPT THE OFFER. SEE
"RECOMMENDATION OF SFP BOARD OF DIRECTORS."
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of June 29 1994 (the "Original Merger Agreement"), as amended by an Amendment
thereto dated as of October 26, 1994, Amendment No. 2 thereto dated as of
December 18, 1994 and Amendment No. 3 thereto dated as of January 24, 1995 (as
so amended, the "Merger Agreement") between SFP and BNI. A summary of the terms
of Amendment No. 3 to the Original Merger Agreement, a copy of which is
attached as Appendix A hereto, is set forth below. See "Amendment No. 3 to
Merger Agreement." A summary of the Merger Agreement, prior to the execution of
Amendment No. 3, is set forth in "The Tender Offer--10. Purpose of the Offer;
The Merger Agreement" of the Original Offer to Purchase.
The purpose of the Offer is to acquire shares of SFP Common Stock and to
facilitate the Merger, which the Board of Directors of SFP believes is in the
best interest of SFP stockholders. The Offer also provides an opportunity to
existing stockholders of SFP to sell shares of SFP Common Stock at a premium
over recent trading prices. See "The Tender Offer--6. Price Range of SFP Common
Stock; Dividends" of the Original Offer to Purchase. The closing price of SFP
Common Stock on January 24, 1995, as reported in The Wall Street Journal, was
$18 per share.
2
<PAGE>
Up to 63,000,000 shares of SFP Common Stock are to be purchased in the Offer;
any shares tendered in response to the Offer over and above such amount would
be subject to proration in accordance with the terms of the Offer. Proration
may result in SFP stockholders receiving cash for only a portion of any shares
of SFP Common Stock tendered, with the remaining consideration to be received
in the form of common stock, no par value, of BNI ("BNI Common Stock") pursuant
to the Merger after the receipt of ICC approval and satisfaction or waiver of
the other conditions to the Merger.
All information herein concerning BNI has been furnished by BNI, and all
information herein concerning SFP has been furnished by SFP. BNI has
represented and warranted to SFP, and SFP has represented and warranted to BNI,
that the particular information so furnished is true and complete.
The Offer does not constitute a solicitation of proxies for any meeting of
SFP's stockholders. Such solicitation by SFP will be made only pursuant to
separate proxy materials complying with the requirements of Section 14(a) of
the Securities Exchange Act of 1934, as amended. In addition, this Offer is
neither an offer to sell nor a solicitation of offers to buy any securities
which may be issued in the Merger. Such securities have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may be
offered only by means of a prospectus complying with the requirements of the
Securities Act. A joint proxy statement/prospectus relating to the Merger has
been distributed to SFP stockholders.
IN ORDER TO VOTE FOR THE MERGER, AN SFP STOCKHOLDER IS REQUIRED TO SUBMIT A
PROXY OR VOTE IN PERSON AT THE SFP STOCKHOLDER MEETING SCHEDULED FOR FEBRUARY
7, 1995 OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Stockholders are urged to read the Original Offer to Purchase, the First
Supplement, this Supplement and the related Letter of Transmittal carefully
before deciding whether to tender their shares of SFP Common Stock.
AMENDMENT NO. 3 TO MERGER AGREEMENT
The following is a brief summary of certain provisions of Amendment No. 3, a
copy of which is attached as Appendix A to this Supplement and is incorporated
herein by reference. The summary does not purport to be complete and is
qualified in its entirety by reference to Amendment No. 3. ALL STOCKHOLDERS OF
SFP ARE URGED TO READ AMENDMENT NO. 3 IN ITS ENTIRETY. Capitalized terms not
defined herein have the meanings set forth in the Merger Agreement.
Amendment No. 3 provides that SFP may repurchase up to a maximum of
10,000,000 shares of SFP Common Stock (the "Repurchase Program") if, but only
if, (a) such repurchase is permitted under the credit agreements to be entered
into by SFP in connection with the Offer (the "SFP Credit Agreements"), as such
agreements are in effect at the time the Offer is consummated (whether or not
such agreements are in effect at the time of any such repurchase and without
regard to any waiver of any term thereof) and (b) for any repurchases after
March 31, 1995, (i) SFP's total debt (defined as the sum of short-term debt
plus current maturities of long-term debt plus long-term debt, all as shown on
the consolidated balance sheet of SFP and its consolidated subsidiaries in
accordance with generally accepted accounting principles ("GAAP")) as of its
most recent quarter-end prior to such repurchase does not exceed the levels set
forth below and (ii) cash capital expenditures on a cumulative basis from
January 1, 1995, as of the most recent quarter-end prior to such repurchase,
are at least at the levels set forth below.
Amendment No. 3 further provides that the Exchange Ratio in the Merger would
be equal to a fraction (i) the numerator of which is 0.40, and (ii) the
denominator of which is (A) the number of shares of SFP Common Stock
outstanding (but excluding treasury stock and SFP Common Stock beneficially
owned by
3
<PAGE>
BNI or acquired in the Offer by BNI) immediately prior to the Effective Time
divided by (B) the sum of (1) the number of shares of SFP Common Stock
outstanding (but excluding treasury stock and SFP Common Stock beneficially
owned by BNI or acquired in the Offer by BNI) immediately prior to the
Effective Time and (2) the aggregate number of shares of SFP Common Stock
repurchased by SFP pursuant to the Repurchase Program. The exchange ratio will
be adjusted in a corresponding manner if the Alternative Merger as defined in
the Original Offer to Purchase is effected.
As a result of the foregoing, repurchases under the Repurchase Program would
have the effect of increasing the Exchange Ratio from 0.40 shares of BNI Common
Stock per share of SFP Common Stock (which would remain the Exchange Ratio if
no shares of SFP Common Stock are repurchased under the Repurchase Program) to
a maximum of 0.4347 shares of BNI Common Stock per share of SFP Common Stock if
the maximum 10,000,000 shares of SFP Common Stock are repurchased and no SFP
options are exercised.
SFP Credit Agreements. It is anticipated that the SFP Credit Agreements will
provide, among other things, that SFP may not declare or pay any dividend
(other than dividends payable solely in SFP Common Stock) on, or make any
payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of capital stock of SFP (other than pursuant to the
Offer) or any warrants or options to purchase any such capital stock, whether
outstanding on the date of the SFP Credit Agreements or thereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of SFP or any
subsidiary (such declarations, payments, setting apart, purchases, redemptions,
defeasance, retirements, acquisitions and distributions being "Restricted
Payments"), except that, so long as no default or event of default under the
SFP Credit Agreements exists or would exist after giving effect thereto:
(a) SFP may make Restricted Payments on any date in an amount equal to
the amount of the Primary Restricted Payments Basket (as defined below) on
such date less the aggregate amount of Restricted Payments previously made
pursuant to this clause (a); provided that no Restricted Payments may be
made from amounts constituting part of the Primary Restricted Payments
Basket under clause (b) of the definition of Primary Restricted Payments
Basket unless SFP met the Eligibility Test (as defined below) for the
immediately preceding fiscal quarter; and
(b) in addition to the Restricted Payments permitted pursuant to the
foregoing clause (a), SFP may make Restricted Payments in any fiscal
quarter if (i) SFP met the Eligibility Test for the immediately preceding
fiscal quarter, (ii) the amount of such Restricted Payments do not exceed
the Additional Restricted Payments Basket (as defined below) on the date of
such Restricted Payments less the aggregate amount of Restricted Payments
previously made pursuant to this clause (b), and (iii) simultaneously with
making such Restricted Payments, SFP makes a prepayment in respect of the
term loans under the SFP Credit Agreements in an amount at least equal to
the amount of such Restricted Payments.
For purposes of the foregoing covenant, the following terms will have the
following meanings:
"Additional Restricted Payments Basket": means, on any date, an amount equal
to 50% of the sum of Excess Adjusted Consolidated Cash Flow for each fiscal
quarter of SFP ended after the date of the SFP Credit Agreements and prior to
such date.
"Adjusted Consolidated Cash Flow": means, for any period, consolidated income
from continuing operations for such period, plus depreciation and amortization,
deferred income taxes and merger-related costs (without duplication, net of tax
benefit, if any), in each case to the extent deducted in determining such
consolidated income from continuing operations as determined in accordance with
GAAP applied on a consistent basis, less consolidated capital expenditures for
such period provided that not more than $45 million in the aggregate (less the
amount of income tax expense associated therewith) may be included for merger-
related costs in calculating Adjusted Consolidated Cash Flow during the term of
the SFP Credit Agreements.
4
<PAGE>
"Eligibility Test": SFP shall be deemed to have met the Eligibility Test for
any fiscal quarter if Adjusted Consolidated Cash Flow for such fiscal quarter
exceeds the amount set forth for such fiscal quarter under the column "Cash
Flow Target" below.
<TABLE>
<CAPTION>
QUARTER ENDED CASH FLOW TARGET
- ------------- ----------------
(IN MILLIONS)
<S> <C>
03/31/95................ $ 8.0
06/30/95................ (28.0)
09/30/95................ 3.0
12/31/95................ 63.0
03/31/96................ 31.0
06/30/96................ 8.0
09/30/96................ 40.0
12/31/96................ 92.0
03/31/97................ 42.0
06/30/97................ 25.0
09/30/97................ 60.0
12/31/97................ 113.0
03/31/98................ 49.0
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED CASH FLOW TARGET
- ------------- ----------------
(IN MILLIONS)
<S> <C>
06/30/98................ $36.0
09/30/98................ 73.0
12/31/98................ 125.0
03/31/99................ 58.0
06/30/99................ 49.0
09/30/99................ 89.0
12/31/99................ 141.0
03/31/00................ 58.0
06/30/00................ 49.0
09/30/00................ 89.0
12/31/00................ 141.0
03/31/01................ 58.0
06/30/01................ 49.0
</TABLE>
"Excess Adjusted Consolidated Cash Flow": means, for any fiscal quarter, the
amount, if any, by which Adjusted Consolidated Cash Flow for such fiscal
quarter exceeds the amount set forth for such fiscal quarter under the column
"Cash Flow Target" above.
"Primary Restricted Payments Basket": means, on any calculation date, the sum
of (a) the Basic Amount plus (b) $5,000,000 for each fiscal quarter ended after
the date of the SFP Credit Agreements in which SFP met the Eligibility Test.
For purposes of the foregoing, the "Basic Amount" shall be (i) for any
calculation date during the fiscal quarter ending March 31, 1995, $30,000,000,
(ii) for any calculation date during the fiscal quarter ending June 30, 1995,
$40,000,000 and (iii) for any calculation date thereafter, $50,000,000.
Indebtedness; Capital Expenditure Requirements. In addition, the amounts of
indebtedness and capital expenditures referred to in clause (b) of the second
paragraph of this Section are:
<TABLE>
<CAPTION>
CUMULATIVE
CASH CAPITAL DEBT
EXPENDITURES BALANCE AT
AT QUARTER-END QUARTER-END
-------------- -----------
1995
---- (IN MILLIONS)
<S> <C> <C>
1st Quarter...................................... $ 78 $2,160
2nd Quarter...................................... 194 2,140
3rd Quarter...................................... 301 2,125
4th Quarter...................................... 360 2,045
<CAPTION>
1996
----
<S> <C> <C>
1st Quarter...................................... 423 2,101
2nd Quarter...................................... 533 2,092
3rd Quarter...................................... 628 2,073
4th Quarter...................................... 675 2,017
<CAPTION>
1997
----
<S> <C> <C>
1st Quarter...................................... 738 2,071
2nd Quarter...................................... 848 2,015
3rd Quarter...................................... 943 1,997
4th Quarter...................................... 990 1,850
</TABLE>
5
<PAGE>
ADDITIONAL RECENT DEVELOPMENTS
Union Pacific Proposal; Discussions Concerning Amendment No. 3. On January
17, 1995, Drew Lewis, the Chairman and Chief Executive Officer of Union Pacific
Corporation ("UPC"), sent the following letter to Robert D. Krebs, Chairman,
President and Chief Executive Officer of SFP:
January 17, 1995
Mr. Robert D. Krebs
Chairman, President and CEO
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, IL 60173
Dear Rob:
I am writing to inform you that Union Pacific has revised its acquisition
proposal to increase the price to $18.50 per share in cash and to seek to
acquire 100% of Santa Fe's outstanding shares in the tender offer.
By using our Interstate Commerce Commission approved voting trust, your
shareholders would receive immediate payment of the entire purchase price in
our transaction, without bearing any risk relating to ICC approval of our
combination with Santa Fe. By contrast, the new, leveraged Burlington Northern
transaction would require a delay of up to several years for payment of two-
thirds of the purchase price to Santa Fe shareholders, and would require your
shareholders to bear the risk of ICC approval.
In addition to the all-cash advantage of our offer, we believe our
transaction is superior to the Burlington Northern acquisition when one
discounts BN's purchase price for the time delay in payment, the ICC risk of
non-consummation of the BN transaction and the uncertain value of the BN stock
to be received.
Our preference remains to negotiate a merger agreement with Santa Fe. As your
own advisors stated, we were very close to completing negotiation of a merger
agreement before you announced your new transaction with Burlington Northern.
We should be able to conclude our negotiations very quickly in light of our
revised offer. We continue to believe it is a violation of your Board's
fiduciary duties for Santa Fe to resist negotiating a transaction with Union
Pacific.
If you refuse to negotiate with us, we would be prepared to purchase shares
in our tender offer without a merger agreement, provided that your shareholders
tender at least 90% of Santa Fe's outstanding shares and other impediments such
as the rights plan are eliminated. In order to complete the acquisition on a
unilateral basis, we would first ask the ICC to approve an amendment to our
voting trust agreement that would enable the trustee to cause Santa Fe,
following the acquisition of Santa Fe shares, to agree to cooperate with us in
obtaining ICC approval of a Santa Fe/Union Pacific combination. We would seek
ICC approval of the amended voting trust agreement once Santa Fe shareholders
vote to disapprove the Burlington Northern merger.
Our offer, including the conditions to our transaction, remains unchanged in
all other material respects. Given your rejection of our alternative $20 all-
stock proposal made several months ago, we confirm our withdrawal of such
alternative proposal.
Sincerely,
/s/ Drew
On January 18, 1995, UPC amended its previously announced proposal to acquire
SFP to provide that UPC would acquire all outstanding shares of SFP Common
Stock for $18.50 per share in cash. The UPC proposal contemplates a tender
offer followed by a second-step merger (the "UPC Proposal") in which all
remaining outstanding shares of SFP Common Stock would be converted into $18.50
per share in cash.
6
<PAGE>
In January 1995, SFP renewed its suggestion that BNI consider the possibility
of amending the Original Merger Agreement in the manner contemplated by
Amendment No. 3. BNI initially made no substantive response to this suggestion.
SFP also continued discussing this suggestion with Alleghany Corporation
("Alleghany"), a substantial SFP stockholder.
Between January 19 and 24, representatives of BNI, SFP and their legal and
financial advisors discussed the possibility of adopting Amendment No. 3 and
the proposed terms of Amendment No. 3. BNI's legal and financial advisors also
discussed the proposed amendment with representatives of Alleghany.
The SFP Board met on January 22, 1995 to consider the UPC Proposal. After
hearing from management and SFP's financial and legal advisors, the Board
decided to recommend that SFP stockholders not accept the UPC Proposal. The
Board determined that the UPC Proposal is less favorable for SFP stockholders
than the transactions under SFP's Merger Agreement with BNI.
In reaching this determination, the SFP Board concluded that a BNI
combination is an excellent strategic fit, presents substantial long-term
benefits because of anticipated increases in operating income from the Merger
(which are expected to result from both operating efficiencies and increased
revenues) and is likely to receive Interstate Commerce Commission ("ICC")
approval, or approval from any government agency or executive department to
which the present ICC jurisdiction over railroad mergers is likely to be
transferred. The Board also noted that the SFP/BNI tender offer allows
stockholders who wish to do so to receive cash for a portion of their shares
without waiting for regulatory approval, while at the same time the SFP/BNI
Merger Agreement allows stockholders to participate on a tax-free basis in the
ownership of the combined company.
The Board also noted that, in its judgment, given the substantial long-term
benefits of a SFP/BNI Merger, the value of the aggregate consideration
available to SFP's stockholders under the SFP/BNI Offer and Merger exceeds the
value of the consideration available to SFP's stockholders under the UPC
Proposal. The Board further noted that the stock to be received in the SFP/BNI
Merger would be tax-free while the UPC Proposal would be a fully taxable
transaction.
The Board also received on January 22, 1995 an oral opinion from its
financial advisor, Goldman, Sachs & Co. ("Goldman Sachs"), that, as of January
22, based on various considerations and assumptions, the aggregate of the cash
and stock consideration to be received by all of the holders of outstanding
shares of SFP Common Stock pursuant to the BNI/SFP Offer and Merger (the
"Aggregate Consideration"), considered as a unitary transaction, is fair to
such holders. In connection with this opinion, Goldman Sachs updated its
evaluation of the UPC Proposal in light of the transactions contemplated by the
then existing BNI Merger Agreement (the "BNI Transactions"). Since the UPC
Proposal is for 100% cash, it has a nominal value of $18.50 per share of SFP
Common Stock. Based on the foregoing, the analysis indicated that the UPC
Proposal represented a 2.1% premium over the $18.125 closing price of SFP
Common Stock on January 20, 1995. Based upon a BNI share price of $50.75
(closing price on January 20, 1995), Goldman Sachs calculated the nominal value
of the BNI Transactions prior to Amendment No. 3 to be $20.20 per share of SFP
Common Stock, consisting of $20.00 per share in cash for 33.2% of SFP Common
Stock ($6.64) and 0.40 shares of BNI Common Stock per share of SFP Common Stock
for 66.8% of SFP Common Stock ($13.56). Based on the foregoing, the analysis
indicated that the BNI Transactions represented a 11.4% premium over the
$18.125 closing price of SFP Common Stock on January 20, 1995. Based upon a BNI
share price ranging from $44.00 to $53.00, Goldman Sachs calculated the per
share nominal value of the BNI Transactions to range from $18.40 to $20.80.
Goldman Sachs compared these values with the results of a discounted market
price analysis based upon a BNI share price ranging from $46.00 to $54.00.
After the application of a discount factor of 10% to the value of the stock
portion of the BNI Transactions (on a dividend adjusted basis), the per share
value of the BNI Transactions ranged from $17.38 to $19.32; at a discount
factor of 15% such per share value ranged from $16.91 to $18.77.
7
<PAGE>
Goldman Sachs also presented an illustrative analysis of the discounted
implied value of the BNI Transactions. In connection with this analysis,
Goldman Sachs assumed 1997 earnings per share of the combined company to be
$6.82 based on financial projections prepared by the senior managements of SFP
and BNI and assuming that the synergies expected to be realized from the Merger
(excluding certain non-recurring cash costs associated with the Merger) would
be $336 million in the first year after the Merger is consummated (which was
assumed to be 1997). Using a price/earnings multiple for premier railroad
stocks from 11x to 13x, Goldman Sachs calculated the midpoint of the implied
share price for BNI at December 31, 1996 to be $81.84. The foregoing
calculations indicated that the discounted implied value of the BNI
Transactions would be $23.18 per share of SFP Common Stock, consisting of
$20.00 per share in cash for 33.2% of SFP Common Stock ($6.64) and 66.8% of the
present value (assuming a 15% discount rate discounted for two years) of 0.40
shares of BNI Common Stock (based upon the midpoint calculated above of $81.84)
per share of SFP Common Stock ($16.54). In preparing this illustrative
analysis, Goldman Sachs assumed, with the consent of SFP, that the financial
forecasts for SFP and BNI after giving effect to the Merger, including, without
limitation, projected cost savings and operating synergies resulting from the
Merger, had been reasonably prepared on a basis reflecting the best currently
available judgments and estimates of SFP and BNI and that such forecasts would
be realized in the amounts and at the times contemplated thereby.
Goldman Sachs confirmed its January 22, 1995 oral opinion by delivery of its
written opinion dated the date hereof. See the full text of the opinion of
Goldman Sachs dated the date hereof (attached hereto as Appendix B), which
takes account of Amendment No. 3 and sets forth assumptions made, matters
considered and limits on the review undertaken by Goldman Sachs.
At its January 22 meeting, the SFP Board also discussed the possibility of
amending the Merger Agreement in the manner contemplated by Amendment No. 3 and
of amending SFP's Shareholder Rights Plan (the "Shareholder Rights Plan"), as
requested by Alleghany, to provide that the Rights thereunder would not be
triggered until a stockholder acquired 15% or more of SFP's outstanding Common
Stock (the "Rights Plan Amendment"). The threshold for triggering the Rights
under the original Shareholder Rights Plan was 10%.
Also on January 22, 1995, Mr. Krebs sent the following letter to Mr. Lewis:
Mr. Drew Lewis
Chairman and Chief Executive Officer
Union Pacific Corporation
Martin Tower
Eighth and Eaton Avenues
Bethlehem, Pennsylvania 18018
Dear Drew:
This is in response to your letter to me dated January 17, 1995 in which you
informed me that Union Pacific was amending its tender offer for shares of
Santa Fe common stock and is seeking to negotiate a merger agreement with Santa
Fe.
As you know, Santa Fe is a party to a merger agreement, as amended, with
Burlington Northern which provides for a strategic combination of the two
companies, with significantly enhanced value for Santa Fe stockholders. The
Santa Fe Board of Directors, at a meeting held today, has determined that Union
Pacific's amended tender offer is less favorable for Santa Fe stockholders than
the transactions under Santa Fe's amended merger agreement with Burlington
Northern.
In reaching this determination, the Santa Fe Board concluded that a
Burlington Northern-Santa Fe combination is an excellent strategic fit,
presents substantial long-term benefits because of anticipated increases in
operating income from the merger (which are expected to result from both
operating efficiencies
8
<PAGE>
and increased revenues) and is likely to receive ICC approval, or approval from
any government agency or executive department to which the present ICC
jurisdiction over railroad mergers is likely to be transferred. The Board also
noted that the Santa Fe/Burlington Northern tender offer allows stockholders
who wish to do so to receive cash without waiting for regulatory approval,
while at the same time the Santa Fe/Burlington Northern merger agreement allows
stockholders to participate on a tax-free basis in the ownership of the
combined company.
The Board also noted that, in its judgment, given the substantial long-term
benefits of a Santa Fe/Burlington Northern merger, the value of the aggregate
consideration available to Santa Fe stockholders under the Santa Fe/Burlington
Northern tender offer and merger exceeds the value of the consideration
available to Santa Fe stockholders under the amended Union Pacific tender
offer. The Board further noted that the stock to be received in the Santa
Fe/Burlington Northern merger would be tax-free while the Union Pacific tender
offer would be a fully taxable transaction.
The Board also received on January 22, 1995 an oral opinion from its
financial advisor, Goldman, Sachs & Co., that the aggregate of the cash and
stock consideration to be received by all of the holders of outstanding shares
of Santa Fe common stock pursuant to the Burlington Northern/Santa Fe tender
offer and merger, considered as a unitary transaction, is fair to such holders.
In light of these factors, the Board has decided not to terminate the
Burlington Northern merger agreement in order to pursue a merger agreement with
Union Pacific. In addition, the Board will continue to recommend to Santa Fe
stockholders that they not tender their shares to Union Pacific.
The Board has also asked me to reemphasize that it has never put the company
up for sale. Instead, the Board has agreed to a strategic combination with
Burlington Northern which is likely to achieve a significant long-term increase
in value for Santa Fe stockholders. The Board remains committed to optimizing
long-term growth in the value of Santa Fe stock.
Sincerely,
/s/ Robert D. Krebs
BNI's Board met on January 23, 1995 to consider the terms of proposed
Amendment No. 3 and, after presentations from BNI's management and legal and
financial advisors, unanimously approved such Amendment. The BNI Board's
approval of Amendment No. 3 contemplated the execution by Alleghany and Mr.
George McFadden ("McFadden") of the voting agreements referred to below. After
the January 23 Board meeting, Gerald Grinstein, Chairman and Chief Executive
Officer of BNI, called Mr. Krebs, to notify him of the BNI Board's decision.
Voting Agreements. In connection with the execution of Amendment No. 3, two
stockholders of SFP, Alleghany and McFadden, executed agreements (the "Voting
Agreements") with BNI and SFP to vote all SFP Common Stock beneficially owned
by them as of the December 27, 1994 record date for the SFP stockholder vote on
the Merger in favor of the Merger Agreement at any special meeting of SFP's
stockholders being held for such purpose for which the record date is December
27, 1994, provided only that SFP's Board of Directors continues to recommend
that the stockholders of SFP vote for approval of the Merger Agreement. In
connection with Alleghany committing to vote its SFP Common Stock in favor of
the Merger Agreement, SFP adopted the Rights Plan Amendment. As of December 27,
1994, the record date for such special meeting, Alleghany beneficially owned
13,494,000 shares (or approximately 7.2%) of the then outstanding shares of SFP
Common Stock and McFadden beneficially owned 1,809,800 shares (or approximately
0.9%) of the outstanding shares of SFP Common Stock.
In Amendment No. 3 to its Schedule 13D filed by Alleghany with the Securities
and Exchange Commission on January 24, 1995, Alleghany indicated that it
presently intends to tender or cause the tender
9
<PAGE>
pursuant to the Offer of all of the shares of SFP Common Stock which it
beneficially owns, and to reinvest the proceeds from such tender in purchases
of SFP Common Stock. Based on information set forth in such Schedule 13D, the
Board of Directors of Alleghany has authorized purchases of additional shares
of SFP Common Stock up to an aggregate beneficial ownership by Alleghany of
9.9% of SFP Common Stock. In addition, Alleghany's Schedule 13D states that
Alleghany management has indicated that it intends to request the Board of
Directors of Alleghany to authorize additional purchases up to an aggregate
beneficial ownership by Alleghany of 14.9% of SFP Common Stock. There can be no
assurance that Alleghany will make any such purchases.
RECOMMENDATION OF SFP BOARD OF DIRECTORS
At a meeting on January 24, 1995, the SFP Board of Directors, after hearing
presentations from SFP's management and financial and legal advisors, approved
Amendment No. 3 and the Voting Agreements. In connection with the Voting
Agreements, the SFP Board adopted the Rights Plan Amendment. The Board also
changed the Distribution Date under the Shareholder Rights Plan from January
31, 1995 to February 28, 1995.
In connection with its presentation to the SFP Board on January 24 and the
opinion attached hereto as Appendix B, Goldman Sachs updated its evaluation of
the BNI Transactions taking into account Amendment No. 3 to the Original Merger
Agreement. After taking into account Amendment No. 3, Goldman Sachs calculated
the nominal value of the BNI Transactions under two different scenarios.
Assuming that SFP does not repurchase any shares of SFP Common Stock under the
Repurchase Program and based upon a BNI share price of $50.625 (closing price
on January 23, 1995), Goldman Sachs calculated such nominal value of the BNI
Transactions to be $20.17 per share of SFP Common Stock, consisting of $20.00
per share in cash for 33.2% of SFP Common Stock ($6.64) and 0.40 shares of BNI
Common Stock per share of SFP Common Stock for 66.8% of SFP Common Stock
($13.53). Based upon a BNI share price ranging from $44.00 to $53.00, Goldman
Sachs calculated the per share nominal value of the BNI Transactions under this
scenario to range from $18.40 to $20.80. Assuming that SFP repurchases the
maximum of 10 million shares of SFP Common Stock under the Repurchase Program
and based upon a BNI share price of $50.625 (closing price on January 23,
1995), Goldman Sachs calculated such nominal value of the BNI Transactions to
range from $21.21 to $21.34 per share of SFP Common Stock, consisting of $20.00
per share in cash for 33.2% of SFP Common Stock ($6.64) and 0.4308 to 0.4347
shares of BNI Common Stock per share of SFP Common Stock for 66.8% of SFP
Common Stock ($14.57 to $14.70). Based upon a BNI share price ranging from
$44.00 to $53.00, Goldman Sachs calculated the per share nominal value of the
BNI Transactions to range from $19.42 to $22.03 assuming an exchange ratio of
0.4347. The exchange ratio of 0.4347 assumes that no SFP stock options are
exercised prior to the consummation of the Merger and that 115.3 million SFP
shares (excluding treasury stock and SFP Common Stock beneficially owned by BNI
or acquired in the Offer by BNI) are outstanding immediately prior to the
consummation of the Merger. The calculation of the nominal value at this
exchange ratio also assumes that a stockholder who tenders shares and is
prorated to receive cash for 33.2% of its shares will not sell its remaining
shares in the open market after the Offer is completed and before consummation
of the Merger and that SFP purchases 10 million of its shares in the open
market after the Offer is completed and before consummation of the Merger. The
exchange ratio of 0.4308 assumes all granted but unexercised SFP stock options
as of December 31, 1994 were exercised prior to the consummation of the Merger.
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<PAGE>
CERTAIN FINANCIAL INFORMATION
The Repurchase Program. Pursuant to the Repurchase Program, SFP will be
permitted, but not obligated, to repurchase shares of SFP Common Stock (with a
resulting increase in the Exchange Ratio) if, but only if, permitted under the
Merger Agreement and the SFP Credit Agreements. See "Amendment No. 3 to Merger
Agreement" for a summary of certain of the terms of such Agreements. Under the
terms of both agreements, however, SFP will be allowed to repurchase up to $30
million of SFP Common Stock prior to April 1, 1995 without regard to
performance requirements or other limitations. After such date, SFP will be
permitted to make repurchases of up to $40 million (during the second quarter
of 1995) and up to $50 million after July 30, 1995 (which amounts generally
will be reduced by repurchases made prior thereto) subject only to compliance
with the capital expenditure and total debt provisions of the Merger Agreement.
If SFP were to repurchase $50 million of SFP Common Stock at an average
purchase price of $20 per share of SFP Common Stock (the same price as the
Offer and as assumed in the pro forma financial statements included in the
First Supplement), the SFP Recapitalized Pro Forma financial statements would
be affected as follows: (i) pro forma long-term debt would increase or cash
would decrease and stockholders' equity would decrease by $50 million,
respectively, (ii) pro forma annual income from continuing operations would be
approximately $3 million lower, and (iii) pro forma annual earnings per share
would be unchanged, reflecting the lower pro forma income from continuing
operations offset by the lower number of SFP shares outstanding. At the $50
million repurchase level, the Exchange Ratio would increase to approximately
0.408.
For all other repurchases, SFP must satisfy the various criteria set forth in
the Merger Agreement and the SFP Credit Agreements. The combined impact of
these restrictions is generally that additional repurchases can only be
completed if SFP's future performance exceeds the cash flow targets set forth
in the SFP Credit Agreements. These cash flow targets assume SFP financial
performance which generally exceeds those accomplished by SFP for the pro forma
periods presented in the Original Joint Proxy Statement/Prospectus.
Accordingly, while SFP expects to have the ability to accomplish some level of
repurchases, in order to accomplish a repurchase of the full amount of
10,000,000 shares, SFP would have to achieve future financial results which
substantially exceed those accomplished by SFP for the pro forma periods
presented. See the pro forma financial information set forth in the Original
Offer to Purchase for information with respect thereto.
SFP anticipates that, as of this time, that at least $50 million for
repurchases will be available under the terms of the Merger Agreement and SFP
Credit Agreements in 1995. However, there can be no assurance that, even if
permitted under the SFP Credit Agreements and the Merger Agreement, SFP will
repurchase shares of SFP Common Stock under the Repurchase Program or, if it
does, the amount, timing or prices of any such repurchase, all of which will be
in the sole discretion of SFP.
Additional Financial Considerations. As more fully set forth in the Original
Joint Proxy Statement/Prospectus, in their application to the ICC for approval
of the merger, BNI and SFP state that the Merger is expected to result in an
increase in operating income of approximately $560 million per year, most of
which will be achieved in the first three years following consummation of the
Merger.
There can be no assurance that these potential benefits will be realized or
that the ICC will not impose conditions on the operations of the merged entity
that will affect its ability to fully achieve any one or more of these
benefits. Moreover, in order to achieve the increases in operating income
mentioned above, it is expected that certain nonrecurring cash costs would be
incurred, which would include relocation, employee separation and retraining
and capital improvement costs. The ICC application states that those costs are
approximately $350 million, a substantial portion of which will be incurred
during the first year following consummation of the Merger. Additionally, the
expected increase in operating income does not include the noncash effects of
applying purchase accounting, which will reduce operating income. A more
detailed description of what BNI and SFP have stated in the ICC application, as
well as some important caveats about this information, is provided at pages 88
through 90 of the Original Joint Proxy Statement/Prospectus.
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<PAGE>
CERTAIN ADDITIONAL INFORMATION
Litigation. On January 18, 1995, UPC filed with the Delaware Chancery court a
motion seeking leave to file a Second Amended and Supplemental Complaint. The
Second Amended and Supplemental Complaint that is the subject of UPC's motion
proposes to add allegations based on certain events occurring after UPC filed
its First Amended and Supplemental Complaint. In particular, the Second Amended
and Supplemental Complaint seeks to add allegations that UPC's January 17, 1995
revised tender offer is purportedly superior to the proposed SFP-BNI merger,
that SFP and BNI's proposed purchase of approximately 33 percent of SFP's
shares threatens to irreparably harm SFP's stockholders, that SFP is
purportedly "for sale" and that SFP's directors have breached their fiduciary
duties to SFP and its stockholders by purportedly refusing to negotiate with
UPC on a "fair and equal basis" regarding UPC's tender offer and merger
proposal, by adopting on November 28, 1994 and purportedly threatening to
employ the SFP Shareholder Rights Plan and by agreeing to a purportedly
excessive termination fee and expense reimbursement provision payable to BNI
under certain conditions if the proposed SFP-BNI merger is not consummated, all
of which purportedly constitutes a course of conduct intended to improperly
coerce SFP stockholders to favor the proposed SFP-BNI merger. The Second
Amended and Supplemental Complaint further proposes to allege that BNI
purportedly has aided and abetted SFP's directors in these alleged breaches by
insisting on and agreeing to the termination fee and expense reimbursement
provisions. The Second Amended and Supplemental Complaint proposes to seek, as
additional relief to that requested in its First Amended and Supplemental
Complaint, a mandatory injunction requiring SFP to adopt "fair and equitable"
procedures for the acceptance and consideration of competing bids for SFP, an
injunction against the operation of the SFP Shareholder Rights Plan or,
alternatively, requiring SFP's directors to redeem the shareholder rights or
render them inapplicable or unenforceable to UPC's tender offer and merger
proposal, an injunction against BNI from purportedly aiding and abetting SFP's
directors' alleged breaches of their fiduciary duties and a declaration that
the termination fee and expense reimbursement provisions of the SFP-BNI Merger
Agreement are invalid and unenforceable. UPC's motion for leave to file the
Second Amended and Supplemental Complaint is currently pending before the
Chancery Court. BNI, SFP and SFP's directors believe that the Second Amended
and Supplemental Complaint is meritless and intend to oppose it vigorously.
SFP Rights Plan. On January 24, 1995, SFP's Board of Directors amended the
Rights Agreement dated as of November 28, 1994 between SFP and the Rights Agent
party to the Rights Agreement. Prior to the Rights Plan Amendment, if any
person (other than SFP, its affiliates or any person receiving newly-issued
shares of SFP Common Stock directly from SFP) were to become the beneficial
owner of 10% (the "Flip-In Percentage") or more of the then outstanding shares
of Common Stock, each holder of a Right would thereafter have the right to
receive, upon exercise at the then current exercise price of the Right, SFP
Common Stock (or, in certain circumstances, cash, property or other securities
of SFP) having a value equal to two times the exercise price of the Right.
Among other amendments, the Rights Plan Amendment increased the Flip-In
Percentage to 15%. The SFP Rights Agreement does not apply to any acquisition
of shares of SFP Common Stock by BNI pursuant to the terms of the Merger
Agreement and consequently the provisions of the Shareholder Rights Plan would
not apply to the Offer or the Merger. A more detailed description of the
Shareholder Rights Plan is provided under "Rights Plans--SFP Rights Plan" in
the Original Joint Proxy Statement/Prospectus.
Regulatory Developments. A number of proposals are under discussion by
various committees of the United States Congress which in general contemplate
the termination of funding for the ICC and the transfer of its functions to
other Federal agencies. The proposals contemplate transfer of the ICC's
authority over rail mergers to the Department of Transportation or Department
of Justice. BNI and SFP believe that it is likely that the time period for
obtaining merger approval will be shorter under these proposals than under the
present regulatory framework. There can be no assurance that any such proposal
will be enacted or, if enacted, what effect any such proposal might have on the
timing or eventual approval of the Merger.
----------------
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Except as otherwise set forth in this Supplement, the terms and conditions
set forth in the Offer to Purchase remain applicable in all respects to the
Offer. The information set forth herein should be read in conjunction with the
Offer to Purchase.
SANTA FE PACIFIC CORPORATION
BURLINGTON NORTHERN INC.
January 25, 1995
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APPENDIX A
AMENDMENT NO. 3
TO
AGREEMENT AND PLAN OF MERGER
<PAGE>
AMENDMENT NO. 3
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 3 dated as of January 24, 1995 (this "Amendment") between
Burlington Northern Inc., a Delaware corporation ("BNI"), and Santa Fe Pacific
Corporation, a Delaware corporation ("SFP").
WHEREAS, BNI and SFP have previously entered into that certain Agreement and
Plan of Merger dated as of June 29, 1994 between BNI and SFP, as amended by the
Amendment thereto dated as of October 26, 1994 and Amendment No. 2 thereto
dated as of December 18, 1994 (as amended, the "Merger Agreement"); and
WHEREAS, the respective Boards of Directors of BNI and SFP have determined
that it is in the best interests of BNI or SFP, as the case may be, and its
respective stockholders to amend the Merger Agreement as hereinafter set forth
and have duly approved this Amendment and authorized its execution and
delivery.
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used herein, unless otherwise defined herein,
shall have the meanings given them in the Merger Agreement, and each
reference in the Merger Agreement to "this Agreement", "hereof", "herein",
"hereunder" or "hereby" and each other similar reference shall be deemed to
refer to the Merger Agreement as amended hereby. All references to the
Merger Agreement in any other agreement between BNI and SFP relating to the
transactions contemplated by the Merger Agreement shall be deemed to refer
to the Merger Agreement as amended hereby.
2. Section 1.2(a)(i) of the Merger Agreement is hereby amended by
replacing subparagraph (a)(i) of such section in its entirety with the
following:
(a) At the Effective Time:
(i) each share (a "Share" and, collectively, the "Shares") of SFP
Common Stock, par value $1.00 per share (the "SFP Common Stock"),
outstanding immediately prior to the Effective Time shall, except as
otherwise provided in Section 1.2(a)(ii) below, be converted into a
fraction of a share of common stock, no par value (the "BNI Common
Stock"), of BNI (x) the numerator of which is 0.40, and (y) the
denominator of which is equal to (A) the number of shares of SFP
Common Stock outstanding (but excluding treasury stock and SFP
Common Stock beneficially owned by BNI or acquired in the Offer by
BNI) immediately prior to the Effective Time divided by (B) an
amount equal to the sum of (i) the number of shares of SFP Common
Stock outstanding (but excluding treasury stock and SFP Common Stock
beneficially owned by BNI or acquired in the Offer by BNI)
immediately prior to the Effective Time, and (ii) the aggregate
number of shares of SFP Common Stock repurchased by SFP, as
permitted in Section 5.1(j) hereof (such fraction being defined
herein as the "Exchange Ratio"), provided that in no event may the
Exchange Ratio exceed 0.4347; and
3. Section 1.8(c) of the Merger Agreement is hereby amended by replacing
subparagraph (c) of such section in its entirety with the following:
(c) At the Effective Time of the Alternative Merger, (i) each share of
SFP Common Stock outstanding immediately prior to such Effective Time
shall, except as otherwise provided in Section 1.8(d) below, be converted
into a fraction of a share of common stock of BNSF, $.01 par value per
share (the "BNSF Common Stock"), (x) the numerator of which is 0.40 and (y)
the denominator of which is equal to (A) the number of shares of SFP Common
Stock outstanding (but excluding treasury stock and SFP Common Stock
beneficially owned by BNI or acquired in the Offer by BNI) immediately
prior to such Effective Time divided by (B) an amount equal to the sum of
(a) the number of shares of SFP Common Stock outstanding (but excluding
treasury stock and SFP Common Stock beneficially owned
A-1
<PAGE>
by BNI or acquired in the Offer by BNI) immediately prior to such Effective
Time and (b) the aggregate number of shares of SFP Common Stock repurchased
by SFP, as permitted in Section 5.1(j) hereof, provided that the fraction
determined pursuant to this clause (i) shall not exceed 0.4347, (ii) each
share of BNI Common Stock outstanding immediately prior to such Effective
Time shall, except as otherwise provided in Section 1.8(d) below, be
converted into 1.0 share of BNSF Common Stock, and (iii) each share of BNSF
Common Stock held by BNI or SFP shall be cancelled. The numbers calculated
pursuant to this subparagraph (c) shall be adjusted as provided in Section
1.5 hereof if any of the events described in Section 1.5 occur.
4. Section 1.8(g) of the Merger Agreement is hereby amended by replacing
subparagraph (g) of such section in its entirety with the following:
(g) No certificates or scrip representing fractional shares of BNSF
Common Stock will be issued in the Alternative Merger, but in lieu
thereof each holder of SFP Common Stock otherwise entitled to a
fractional share of BNSF Common Stock will be entitled to receive, from
the Exchange Agent in accordance with the provisions of this Section
1.8(g), a cash payment in lieu of such fractional shares of BNSF Common
Stock which would otherwise have been issued (the "Excess Shares"). The
sale of the Excess Shares by the Exchange Agent shall be executed on
the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. Until the net
proceeds of such sale or sales have been distributed to the holders of
SFP Common Stock, the Exchange Agent will hold such proceeds in trust
(the "Common Shares Trust") for the holders of the SFP Common Stock.
BNSF shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with this sale of the Excess
Shares. The Exchange Agent shall determine the portion of the Common
Shares Trust to which each holder of SFP Common Stock shall be
entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction the numerator
of which is the amount of the fractional BNSF Common Stock interest to
which such holder of SFP Common Stock is entitled and the denominator
of which is the aggregate amount of fractional share interests to which
all holders of SFP Common Stock are entitled. As soon as practicable
after the determination of the amount of cash, if any, to be paid to
holders of SFP Common Stock in lieu of any fractional shares of BNSF
Common Stock the Exchange Agent shall make available such amounts to
such holders of SFP Common Stock without interest.
5. Section 5.1 of the Merger Agreement is hereby amended to add a new
subsection (j), which shall provide as follows:
(j) Notwithstanding anything to the contrary in this Agreement, SFP
will be permitted to repurchase up to 10,000,000 shares of SFP Common
Stock at any time (or from time to time as long as the aggregate of
such shares repurchased does not exceed 10,000,000) between the time
shares of SFP Common Stock are purchased pursuant to the Offer and the
Effective Time, if, but only if, (a) such repurchase is permitted by
the credit agreements referred to in clause (ii) of subparagraph (f)
above entered into by SFP in connection with the Offer, as such
agreements are in effect at the time such Offer is consummated (whether
or not such agreements are in effect at the time of any such repurchase
and without regard to any waiver of any provision thereof) and (b) for
any purchases after March 31, 1995, SFP's total debt (which shall equal
the sum of short-term debt plus current maturities of long-term debt
plus long-term debt, all as shown on the consolidated balance sheet of
SFP and its consolidated subsidiaries in accordance with generally
accepted accounting principles), as of the most recent quarter-end
prior to such repurchase, does not exceed the levels set forth in Annex
A hereto and cash capital expenditures on a cumulative basis from
January 1, 1995, as of the most recent quarter-end prior to such
repurchase, are at least at the level shown in Annex A.
6. This Amendment shall be construed in accordance with and governed by
the law of the State of Delaware (without regard to principles of conflict
of laws).
A-2
<PAGE>
7. This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Amendment shall
become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
8. Except as expressly amended hereby, the Merger Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.
Burlington Northern Inc.
/s/ Gerald Grinstein
By __________________________________
Title: Chairman and
Chief Executive Officer
Santa Fe Pacific Corporation
/s/ Robert D. Krebs
By __________________________________
Title: Chairman, President and
Chief Executive Officer
A-3
<PAGE>
ANNEX A
<TABLE>
<CAPTION>
CUMULATIVE
CASH CAPITAL DEBT
EXPENDITURES BALANCE AT
1995 AT QUARTER-END QUARTER-END
---- -------------- -----------
(IN MILLIONS)
<S> <C> <C>
1st Quarter................................... 78 2,160
2nd Quarter................................... 194 2,140
3rd Quarter................................... 301 2,125
4th Quarter................................... 360 2,045
<CAPTION>
1996
----
<S> <C> <C>
1st Quarter................................... 423 2,101
2nd Quarter................................... 533 2,092
3rd Quarter................................... 628 2,073
4th Quarter................................... 675 2,017
<CAPTION>
1997
----
<S> <C> <C>
1st Quarter................................... 738 2,071
2nd Quarter................................... 848 2,015
3rd Quarter................................... 943 1,997
4th Quarter................................... 990 1,850
</TABLE>
A-4
<PAGE>
APPENDIX B
OPINION OF GOLDMAN, SACHS & CO.
<PAGE>
[Goldman, Sachs & Co. Letterhead & Logo]
PERSONAL AND CONFIDENTIAL
January 25, 1995
Board of Directors
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, Illinois 60173-5860
Gentlemen and Madame:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of Santa Fe Pacific Corporation (the "Company") of the Aggregate
Consideration (as defined below) to be received pursuant to the Agreement and
Plan of Merger, dated as of June 29, 1994, as amended to January 24, 1995,
among Burlington Northern Inc. ("BNI") and the Company (the "Agreement") in
connection with the merger of the Company with and into BNI (the "Merger").
The Agreement provides for a joint tender offer (the "Joint Tender Offer")
pursuant to which the Company and BNI will pay $20 per share for an aggregate
of 63 million shares of Common Stock. The Agreement further provides that
following completion of the Joint Tender Offer and the appropriate regulatory
approvals, the Company will be merged with and into BNI and each outstanding
Share (other than Shares already owned by BNI) will be exchanged for shares of
common stock, with no par value, of Burlington Northern Inc. ("BNI Common
Stock") in accordance with the Exchange Ratio provided for in the Agreement.
The aggregate of the cash and stock consideration to be received by all of the
holders of outstanding shares of Common Stock of the Company pursuant to the
Joint Tender Offer and Merger is herein referred to as the "Aggregate
Consideration".
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having performed various investment banking services
for the Company from time to time, including having acted as managing and co-
managing underwriter of public offerings of Common Stock of the Company in
October 1991 and June 1992, respectively, having acted as financial advisor on
the asset exchange between the Company and Hanson Natural Resources Company in
June 1993, having acted as managing underwriter of a public offering of Common
Stock of Santa Fe Pacific Gold Corporation, a subsidiary of the Company, in
June of 1994, having acted as co-managing underwriter of public offerings of 8
3/8% Notes due 2001 and 8 5/8% Notes due 2004 of the Company in January 1994,
as well as having acted as the Company's financial advisor in connection with,
and having participated in certain of the negotiations leading to, the
Agreement. We also have committed to participate as co-arranger and arranging
agent on the Company's bank financing and co-dealer managers in connection with
the Joint Tender Offer. We also have provided certain investment banking
services to BNI from time to time, including acting as co-managing underwriter
of a public offering of BNI Common Stock in November 1991, acting as managing
underwriter of a public offering of 6 1/4% Cumulative Convertible Preferred
Stock in November 1992, and acting as a co-managing underwriter in a public
offering of 7 1/2% Debentures due 2002 in July 1993, and we may provide
investment banking services to BNI in the future.
B-1
<PAGE>
We have also provided certain investment banking services to Union Pacific
Corporation ("UPC") from time to time, including having acted as co-managing
underwriter of a public offering of 7 7/8% Notes due 2002 in February 1992, a
public offering of 8 5/8% Sinking Fund Debentures due 2022 in May 1992, a
public offering of 6% Notes due 2003 in August 1993, a public offering of 7%
Notes due 2000 in June 1994, a public offering of 6 1/8% Notes due 2004 in
January 1994, and as sole managing underwriter of a public offering of 6.12%
Equipment Trust Certificates due February 1, 2004 in January 1994.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Offer to Purchase dated December 23, 1994 of SFP and BNI, as
amended and supplemented to the date hereof; the Joint Proxy
Statement/Prospectus dated October 12, 1994, as amended and supplemented to the
date hereof; Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company and BNI for the five years ended December 31, 1993 (and any
amendments thereto); certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and BNI (and any amendments thereto);
certain other communications from the Company and BNI to their respective
stockholders; certain Current Reports on Form 8-K of the Company and BNI; and
certain internal financial analyses and forecasts for the Company and BNI
prepared by their respective managements. We also have reviewed the Proxy
Statement, dated October 28, 1994, as amended and supplemented to the date
hereof, of UPC, which solicits proxies in opposition to the Merger and the
Offer to Purchase, dated November 9, 1994 of UPC, as amended and supplemented
to the date hereof, which sets forth the proposal of UPC to acquire the
outstanding shares of Common Stock of the Company by means of a cash tender
offer and merger (the "UPC Proposal"). We also have held discussions with
members of the senior management of the Company and BNI regarding the past and
current business operations, financial condition and future prospects of their
respective companies. Furthermore, we have considered the views of the senior
management of the Company regarding the strategic importance of, and potential
synergies expected to be realized from, the Merger. In addition, we have
reviewed the reported price and trading activity for the Common Stock and BNI
Common Stock, compared certain financial and stock market information for the
Company and BNI with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the railroad industry specifically and
in other industries generally and performed such other studies and analyses as
we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or BNI or
any of their respective subsidiaries and we have not been furnished with any
such evaluation or appraisal. We have assumed with your consent that the
transaction will receive regulatory approval in the manner contemplated by the
Company.
Based upon and subject to the foregoing and based upon such other matters as we
considered relevant, it is our opinion that as of the date hereof the Aggregate
Consideration to be received by all of the holders of the outstanding shares of
Common Stock of the Company pursuant to the Joint Tender Offer and the Merger,
considered as a unitary transaction, is fair to such stockholders.
Very truly yours,
/S/ Goldman, Sachs & Co.
Goldman, Sachs & Co.
B-2
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates for SFP Common Stock and any other required
documents should be sent to the Depositary at one of the addresses set forth
below:
The Depositary for the Offer is:
First Chicago Trust Company of New York
By Mail: By Facsimile Transmission: By Hand:
(For Eligible Institutions Only)
Tenders & Exchanges (201) 222-4720 Tenders & Exchanges
P.O. Box 2564 (201) 222-4721 14 Wall Street
Suite 4660 SFP Suite 4680 SFP
Jersey City, NJ 07303-2564 8th Floor
New York, NY 10005
Confirm Facsimile by Telephone:
(For Confirmation Only)
(201) 222-4707
Questions or request for assistance or additional copies of the Offer to
Purchase dated December 23, 1994, the Supplement dated January 13, 1995, this
Supplement, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to any of the Information Agents or either of the Dealer Managers
at their respective addresses and telephone numbers set forth below.
Stockholders may also contact their broker, dealer, commercial bank or trust
company for assistance concerning the Offer.
The Information Agents are:
D.F. KING & CO., INC. MACKENZIE KISSEL BLAKE INC.
PARTNERS INC.
77 Water Street 156 Fifth Avenue 25 Broadway, 6th Floor
New York, New York New York, New York 10010 New York, New York 10004
10005 CALL TOLL FREE (800) 322-2885 CALL TOLL FREE (800)
CALL TOLL FREE (800) 554-7733
697-6974
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO. LAZARD FRERES & CO.
85 Broad Street One Rockefeller Plaza
New York, New York 10004 New York, New York 10020
<PAGE>
EXHIBIT (A)(11)
Contact: Richard Russack (BN) FOR IMMEDIATE RELEASE
(817) 333-6116
Catherine Westphal (Santa Fe)
(708) 995-6273
Burlington Northern and Santa Fe Amend Merger Agreement;
Alleghany Corp., George McFadden to Vote
15.3 Million Santa Fe Shares in Favor of Merger
FORT WORTH, Texas, and SCHAUMBURG, Ill., January 24, 1995 -- Burlington
Northern Inc. (BN) and Santa Fe Pacific Corporation (Santa Fe) today announced
that they have amended their merger agreement to permit Santa Fe under certain
conditions to purchase up to 10 million shares of its common stock after
shareholder approval of the merger and prior to its consummation. The total
number of BN shares that would be issued upon consummation of the merger remains
fixed. Thus, if Santa Fe purchased all 10 million shares the exchange ratio
would be adjusted upwards from .40 to .4347 shares of BN common stock for each
Santa Fe share following government approval of the merger. The joint tender
offer underway by BN and Santa Fe to purchase 63 million Santa Fe shares at $20
per share is not affected by this amendment.
BN and Santa Fe also announced that Alleghany Corporation, which owns
13.494 million shares of Santa Fe (or approximately 7.2 percent of the
outstanding shares), and Mr. George McFadden, who owns 1.8 million shares of
Santa Fe (or approximately 0.9 percent of the outstanding shares), have signed
agreements with BN and Santa Fe to vote in favor of adoption of the merger
agreement as long as at the time of the Santa Fe shareholder meeting (scheduled
for Feb. 7, 1995), Santa Fe's board of directors continues to recommend the
merger to its shareholders.
more . . .
<PAGE>
BN, SANTA FE AMEND MERGER AGREEMENT / ADD TWO
In addition, Santa Fe said that its board of directors amended the
shareholder rights plan to raise the ownership threshold from 10 percent to 15
percent before the rights are triggered. Alleghany, which had requested this
amendment as a condition to signing the voting agreement, has indicated to Santa
Fe that its management will seek authorization from the Alleghany board of
directors to purchase up to 14.9 percent of Santa Fe's outstanding shares at
times and under conditions that management deems appropriate. Santa Fe also
announced that the distribution date under its shareholder rights plan has been
changed from Jan. 31, 1995 to Feb. 28, 1995.
Burlington Northern Inc. (NYSE:BNI) is the parent company of Burlington
Northern Railroad, one of the world's leading providers of transportation and
logistics services, and operator of the longest rail system in North America,
with more than 23,000 miles of track reaching across 25 states and two Canadian
provinces.
Santa Fe Pacific Corporation (NYSE:SFX) is the parent company of The
Atchison, Topeka and Santa Fe Railway Company, which operates in 12 states and
offers service to Mexico. In addition, Santa Fe owns a 44-percent interest in
Santa Fe Pacific Pipeline Partners, L.P.
# # #
<PAGE>
EXHIBIT (A)(12)
A message for Burlington Northern Inc. and Santa Fe Pacific Corp. shareholders:
- --------------------------------------------------------------------------------
NOT SO FAST,
UNION PACIFIC.
[ART]
YOU'VE MISSED THE POINT!
We've read UP's advertisements... heard UP's rhetoric...
and now have been told, by UP of course, that it's all over.
It's not.
A BN-Santa Fe combination offers:
1. GREATER VALUE. A BN-Santa Fe combination offers greater value to
shareholders of both companies. At least $300 million in new revenue is expected
after the third year. At least $560 million is expected in new operating income.
An operating ratio below 80 percent. And the benefit of combining two railroads
whose value to shareholders has more than doubled in the last five years.
2. QUICK APPROVAL. UP argues approval of a BN-Santa Fe merger will take several
years. Not so. The Interstate Commerce Commission has already established an 18-
month schedule. In addition if the ICC is abolished, regardless of whether the
Department of Justice or the Department of Transportation inherits rail merger
authority, many observers expect approval of a BN-Santa Fe combination six to
twelve months later. That means Santa Fe shareholders get greater value from the
BN merger agreement, sooner.
3. LESS TAX, MORE VALUE. BN's friendly offer is for $20.00 in cash per share for
the first 63 million Santa Fe shares and a TAX-FREE exchange of .40 of a BN
---
share (equivalent to $20.30 per share based on the January 20 closing price of
BNI on NYSE) for all remaining shares. By contrast, UP's hostile tender offer at
$18.50 is FULLY TAXABLE.
VOTE FOR THE BURLINGTON NORTHERN
---
AND SANTA FE RAILWAY COMPANY.
LOGO BURLINGTON NORTHERN
IMPORTANT NOTICE TO BN SHAREHOLDERS: Regardless of the number of shares you own,
it is important that they be represented at the BN shareholders' meeting. Even
if you have sold your shares since the December 27, 1994, record date, as the
holder of record you are still entitled to exercise your right to vote. We urge
you to vote FOR the BN/Santa Fe merger. Should you have any questions or need
assistance in voting your Burlington Northern proxy, PLEASE CALL OUR PROXY
SOLICITOR, KISSEL-BLAKE INC. AT 1-800-554-7730.
<PAGE>
GRAPHICS APPENDIX LIST
PAGE WHERE
GRAPHIC
APPEARS DESCRIPTION OF GRAPHIC OR CROSS REFERENCE
- --------------------------------------------------------------------------------
Page 1 THE UNION PACIFIC NAME AND LOGO APPEARS IN
A CIRCLE WITH A LINE DRAWN ACROSS IT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.(C)(2)
LETTERHEAD OF ALLEGHANY CORPORATION
PARK AVENUE PLAZA
55 East 52nd Street
John J. Burns, Jr. New York, NY 10055-0001 212 752-1356
President
January 24, 1995
Mr. Robert D. Krebs
Chairman, President and
Chief Executive Officer
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, Illinois 60173
Mr. Gerald Grinstein
Chairman and Chief
Executive Officer
Burlington Northern Inc.
3800 Continental Plaza
777 Main Street
Fort Worth, Texas 76102
Gentlemen:
This letter agreement is to set forth the understanding among us as
follows:
1. In consideration of Santa Fe Pacific Corporation ("SFP") and
Burlington Northern Inc. ("BNI") entering into Amendment No. 3 dated as of
January 24, 1995 ("Amendment No. 3") to the Agreement and Plan of Merger dated
as of June 29, 1994 between BNI and SFP (as so amended, the "Merger Agreement"),
and in consideration of action taken by the Board of Directors of SFP to
increase the percentage ownership of SFP common stock which triggers rights
under the SFP rights plan adopted in November 1994 from 10% to 15%, Alleghany
Corporation ("Alleghany") hereby agrees, on its own behalf and solely in its
capacity as a stockholder of SFP, to vote or cause to be voted in favor of the
Merger Agreement the Alleghany Owned Shares (as defined in paragraph 2 below) at
any meeting of SFP stockholders held to consider the Merger Agreement for which
the record date is December 27, 1994, provided that, at the date of such
meeting, the Board of Directors of SFP continues to recommend that the
stockholders of SFP vote for approval of the Merger
<PAGE>
Agreement. Amendment No. 3 permits the purchase by SFP of additional shares of
SFP common stock prior to consummation of the Merger (as defined in the Merger
Agreement) under certain circumstances which purchases would result in an
increase in the Exchange Ratio (as defined in the Merger Agreement) of up to
0.4347.
2. Alleghany represents and warrants that (a) as of December 27, 1994,
Alleghany beneficially owned 13,494,000 shares of SFP common stock (the
"Alleghany Owned Shares"), of which 7,278,962 shares were owned by Alleghany
directly and 6,215,038 shares were owned by subsidiaries of Alleghany, and (b)
as of the date of any meeting of SFP stockholders for which the record date is
December 27, 1994, Alleghany will have the right to vote (or cause to be voted)
all Alleghany Owned Shares.
3. Neither the execution and delivery of this letter agreement by
Alleghany nor the performance by Alleghany of its obligations hereunder will
violate or result in any breach or violation of or be in conflict with or
constitute a default under any agreement or other instrument to which Alleghany
is a party (including Alleghany's certificate of incorporation and by-laws). If
any provision of this letter agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the remaining
provisions of this letter agreement. This letter agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
4. This letter agreement sets forth the entire understanding and
agreement among the parties hereto and may be amended only by a written
agreement executed by all of the parties hereto. This letter agreement has been
duly authorized by all necessary corporate action of the part of BNI, SFP or
Alleghany, as the case may be. This letter agreement shall terminate upon the
earlier to occur of (i) a final SFP vote on the Merger Agreement and (ii) any
withdrawal by the SFP Board of Directors of its recommendation that the
stockholders of SFP vote for approval of the Merger Agreement.
If the foregoing accurately sets forth our agreement, please so indicate
by signing below.
<PAGE>
Very truly yours,
ALLEGHANY CORPORATION
By /s/ John J. Burns, Jr.
----------------------
John J. Burns, Jr.
President and Chief
Executive Officer
Accepted and Agreed as of the
24th day of January, 1995
SANTA FE PACIFIC CORPORATION
By /s/ Robert D. Krebs
-------------------
Robert D. Krebs
Chairman, President and Chief Executive Officer
BURLINGTON NORTHERN INC.
By /s/ Gerald Grinstein
--------------------
Gerald Grinstein
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT 99.(C)(3)
[LETTERHEAD OF MCFADDEN BROTHERS
745 Fifth Avenue
New York, NY 10151
365-2120]
January 24, 1995
Mr. Robert D. Krebs
Chairman, President and
Chief Executive Officer
Santa Fe Pacific Corporation
1700 East Golf Road
Schaumburg, Illinois 60173
Mr. Gerald Grinstein
Chairman and Chief
Executive Officer
Burlington Northern Inc.
3800 Continental Plaza
777 Main Street
Fort Worth, Texas 76102
Gentlemen:
This letter agreement is to set forth the understanding among us as
follows:
1. In consideration of Santa Fe Pacific Corporation ("SFP") and
Burlington Northern Inc. ("BNI") entering into Amendment No. 3 dated as of
January 24, 1995 ("Amendment No. 3") to the Agreement and Plan of Merger dated
as of June 29, 1994 between BNI and SFP (as so amended, the "Merger Agreement"),
George McFadden ("Stockholder") hereby agrees, on his own behalf and solely in
his capacity as a stockholder of SFP, to vote or cause to be voted in favor of
the Merger Agreement the Stockholder Owned Shares (as defined in paragraph 2
below) at any meeting of SFP stockholders held to consider the Merger Agreement
for which the record date is December 27, 1994, provided that, at the date of
such meeting, the Board of Directors of SFP continues to recommend that the
stockholders of SFP vote for approval of the Merger Agreement. Amendment No. 3
permits the purchase by SFP of additional shares of SFP common stock prior to
consummation of the Merger (as defined in the Merger Agreement) under certain
circumstances which purchases would result in an increase in the Exchange Ratio
(as defined in the Merger Agreement) of up to 0.4347.
2. Stockholder represents and warrants that (a) as of December 27, 1994,
Stockholder beneficially owned 1,809,800 shares of SFP common stock (the
"Stockholder Owned Shares"), and (b) as of the date of any meeting of SFP
stockholders to vote on the Merger Agreement for which the record date is
December 27, 1994, Stockholder will have the right to vote (or cause to be
voted) all Stockholder Owned Shares.
<PAGE>
3. Neither the execution and delivery of this letter agreement by
Stockholder nor the performance by Stockholder of his obligations hereunder will
violate or result in any breach or violation of or be in conflict with or
constitute a default under any agreement or other instrument to which
Stockholder is a party. If any provision of this letter agreement shall be
invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining provisions of this letter agreement. This
letter agreement shall be governed by and construed in accordance with the laws
of the State of Delaware.
4. This letter agreement sets forth the entire understanding and
agreement among the parties hereto and may be amended only by a written
agreement executed by all of the parties hereto. This letter agreement has been
duly authorized by all necessary corporate action of the part of BNI, SFP or
Stockholder, as the case may be. This letter agreement shall terminate upon the
earlier to occur of (i) a final SFP vote on the Merger Agreement and (ii) any
withdrawal by the SFP Board of Directors of its recommendation that the
stockholders of SFP vote for approval of the Merger Agreement.
If the foregoing accurately sets forth our agreement please so indicate
by signing below.
Very truly yours,
/s/ George McFadden
-------------------
George McFadden
Accepted and Agreed as of the
24th day of January, 1995
SANTA FE PACIFIC CORPORATION
By /s/ Robert D. Krebs
-------------------
Robert D. Krebs
Chairman, President and Chief Executive Officer
BURLINGTON NORTHERN INC.
By /s/ Gerald Grinstein
--------------------
Gerald Grinstein
Chairman and Chief Executive Officer
