SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
----------------------
Filed by the Registrant [x]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
----------------------
BURLINGTON NORTHERN INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BURLINGTON NORTHERN INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
----------------------
Payment of Filing Fee (Check the appropriate box): (/1/)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[x] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Santa Fe Pacific Corporation common stock, par value $1.00 per
share.
(2) Aggregate number of securities to which transactions applies:
187,049,738 shares of Santa Fe Pacific Corporation common stock.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $49 1/2 (/2/)
(4) Proposed maximum aggregate value of transaction: $3,148,047,091
(/2/)
(/1/) The filing fee previously was paid with the initial filing of the
preliminary proxy materials on August 8, 1994 and with the filing
of two Registration Statements on Form S-4 on October 12, 1994
(Reg. No. 33-56007) and October 27, 1994 (Reg. No. 33-56183),
respectively.
(/2/) For purposes of calculating the filing fee only. Upon consummation
of the Merger, each outstanding share of Santa Fe Pacific
Corporation common stock, par value $1.00 per share, will be
converted into the right to receive 0.34 shares of Burlington
Northern Inc. common stock, no par value. The proposed maximum
aggregate value of the transaction described in the preliminary
proxy materials is $3,148,047,091 (calculated based on the number
of shares of Santa Fe Pacific Corporation common stock
outstanding as of October 19, 1994, the average of the high and
low reported prices of Burlington Northern Inc. common stock on
October 21, 1994 and the exchange ratio of 0.34). The filing fee
is one-fiftieth of that amount.
[x] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:...................$1,145,590
(2) Form, Schedule or Registration
Statement No.:............................Preliminary Proxy
Statement
Registration Statement
on Form S-4
(Reg. No. 33-56007)
Registration Statement
on Form S-4, as amended
(Reg. No. 33-56183)
(3) Filing Party: ...................Burlington Northern
Inc./Santa Fe
Pacific Corporation
(4) Date filed: ...................August 8, 1994
...................October 12, 1994
...................October 27,1994
BURLINGTON NORTHERN/SANTA FE
MERGER
BN/SF MERGER
Summary of Amended Agreement - First Step
Joint Cash Tender for 63 Million Santa Fe Shares
(About 33% of Outstanding Shares at $20 Per Share)
bullet Santa Fe to Purchase 38 Million Shares
bullet BN to Purchase 25 Million Shares
bullet Tender Offer Launched on December 23, 1994, and Scheduled to Expire
February 8, 1995
bullet Tender Offer Subject, Among Other Things, to
bullet Approval of Second-Step Merger by BN and Santa Fe
Shareholders at Meetings Scheduled for February 7, 1995
bullet At Least 63 Million Shares Tendered and Not Withdrawn
bullet Both BN and Santa Fe Obtaining Sufficient Financing
Commitments Obtained)
bullet Tender Offer Not Subject to ICC Approval of Merger
[Burlington Northern Inc. Logo appears on each page]
BN/SF MERGER
Summary of Amended Agreement - Second Step
Tax Free Stock-for-Stock Merger
bullet Exchange Ratio of .4 BN Share for Each Remaining Outstanding Santa
Fe Share
bullet Subject, Among Other Things, to
bullet ICC Approval of Merger (Expected in Mid-1996)
bullet Approval of BN and Santa Fe Shareholders
bullet Consummation of Joint Tender Offer
BN/SF MERGER
Possible Incremental Share Repurchase
bullet Santa Fe Can Repurchase Up to 10 Million Shares Between
Tender and Merger As Long As Certain Conditions Are Met
bullet Exchange Ratio at Closing Will be Adjusted for Shares
Actually Repurchased Up to .4347
BN/SF NETWORKS
[Artwork map of contiguous U.S.]
with the Burlington Northern
and Santa Fe Rail lines drawn up
to Vancouver and Winnipeg, Canada
BN/SF MERGER
Benefits
bullet Broad Geographic Coverage
bullet Extensive Single-Line Service
bullet Diversified Traffic Base
bullet Revenue Growth
bullet Operating Cost Savings
bullet Overhead Expense Reduction
bullet Financial Strength
BN/SF MERGER
Benefits
bullet Broad Geographic Coverage
bullet All Major Western Ports
bullet Mexican and Canadian Gateways
bullet Gulf Ports
bullet Major Midwestern and Southwestern Gateways
bullet Extensive Single-Line Service
bullet Eliminates Costs and Delays of Interchanges
bullet Improves Productivity
bullet Enhances Responsiveness to Customer Needs
bullet Opens Access to New Markets
BN/SF MERGER
Benefits
Diversified Traffic Base
% of 1993 Revenue
-----------------------------
Revenue Source BN BN/SF Combined
- --------------------------- ------ -------------------
Coal 33% 25%
Intermodal 16 24
Agricultural 17 14
Commodities
Chemicals 9 10
Forest Products 10 8
Consumer Products 5 7
Other 10 12
--- ---
Total 100% 100%
=== ===
BN/SF MERGER
Benefits
Revenue Growth
($ Millions)
Truck Diversions $132.1
New Rail Business 115.2
Extended Hauls 59.2
--------
Total $306.5
Source: ICC Merger Case
BN/SF MERGER
Benefits
Operating Cost Savings
($ Millionsl)
Reroute Savings $14.7
37 Million Car Miles
2.7 Billion Gross Ton Miles
1.8 Million Locomotive Miles
525,000 Train Miles
4 Million Gallons of Diesel Fuel
Common Point Consolidations 11.9
Mechanical 45.7
Engineering/Maintenance of Way 12.7
Purchasing and Materials 13.3
Intermodal Operations 8.7
--------
Total $107.0
Source: ICC Merger Case
BN/SF MERGER
Benefits
Overhead Expense Reduction
($ Millions)
Executive Office $ 9.4
Transportation/Maintenance Support 37.3
Purchasing Support 32.4
Operating Support 24.2
Management Information Systems 45.1
Business Unit Overheads 86.8
Other General and Administrative 110.8
---------
Total $346.0
Source: ICC Merger Case
BN/SF MERGER
Benefits
($ Millions)
Annual Benefits Year One Year Two Year Three Normal Year
- ------------------------ -------- -------- ---------- -----------
Increased Revenues $183.9 $260.5 $291.1 $306.5
Less: Costs of Handling 119.6 169.5 189.4 199.4
-------- -------- ---------- -----------
$ 64.3 $ 90.1 $101.8 $107.1
Operating Benefits $271.8 $385.1 $430.3 $453.0
-------- -------- ---------- -----------
Total Annual Benefits $336.1 $476.1 $532.1 $560.1
======== ======== ========== ===========
One-Time Costs
- ------------------------
Separation/Relocation/
Training $211.6 $ 42.3 $ 28.2
Net Capital Expenditures $ 63.4
Source: ICC Merger Case
BN/SF MERGER
Pro Forma Impact on BN*
1995 1996 1997 1998 1999
------ ------ ----- ----- -----
E.P.S. Accretion/(*Dilution) (5.3%) (4.7%) 1.3% 10.6% 15.3%
Debt/Capitalization
(Beginning of Year)
Pro Forma Combined 48.6% 46.1% 39.9% 32.6% 22.5%
Tender Offer Only 52.0% 48.1% -- -- --
EBIT/Interest 5.1x 6.1x 5.7x 7.6x 10.3x
* As Calculated by BN's financial advisor Lazard Freres & Co.
Based on assumed merger date of January 1, 1997. Does not
include SF repurchase program, which, if included, would
have no material impact to positive impact on EPS,
accretion/(dilution).
BN/SF MERGER
Estimated Timetable
Joint Tender Commenced December 23, 1994
Joint Proxy Statement Sent to Shareholders January 16, 1995
Supplemental Joint Proxy Materials Sent to Shareholders January 26, 1995
Shareholder Meeting to Vote on Merger February 7, 1995
Joint Tender Offer Consummated February 8, 1995
ICC Approval Mid-1996
BN/SF MERGER
Summary of Benefits to Shareholders
bullet Likely ICC Approval
bullet Pro-Competitive
bullet Shipper Support
bullet Labor Impact
bullet Incremental Operating Income of $560 Million
bullet Significant Growth Prospects
bullet Strong Financial Performance and Balances Sheet
bulllet Enhanced Shareholder Value
BN/SF MERGER
Current Blended Value of BN/SF Agreement
BN/SF Agreement with No
Incremental Share Repurchase Value
---------------------------- -----
$20 Cash Tender for 33.2% of Stock $6.64
0.4 BN Shares for 66.8% of Stock* $13.53
-----
Total $20.17
Incremental Repurchase of
10 Million Shares Value
------------------------- -----
$20 Cash Tender for 33.2% of Stock $6.64
0.4347 BN Shares for 66.8% of Stock* $14.70
-----
Total $21.34
______________
* Using BN Share Price on 1/23/95 of $50.625
BN/SF MERGER
DISCOUNTED FUTURE BLENDED VALUE ANALYSIS
1997 Pro Forma Combined E.P.S. $6.92
Forward P/E Multiple for Premier Rail Stock 12.0x
Hypothetical BN/SF Share Price as of 1/1/97 $81.84
Net Present Value at 15% Discount Rate $61.88
0.4 BN Shares for 66.8% Based on NPV $16.54
$20 Cash Tender for 33.2% of Stock $6.64
------
Total $23.18
January 30, 1995
BURLINGTON NORTHERN INC. [LOGO]
Gerald Grinstein 3800 Continental Plaza
Chairman and 777 Main Street
Chief Executive Officer Fort Worth, Texas 76102-5384
(817) 333-2272
Dear BN Shareholder,
With only one week remaining before the special shareholders meeting
to approve the merger between Burlington Northern Inc. and Santa Fe Pacific
Corp., it is timely to write again to encourage you to vote FOR the merger.
The record-setting financial performance of BN during the second half
of 1994 has set the benchmark for 1995. The financial community has estimated
that BN's 1995 earnings will grow at least by 20 percent over the $4.27 earned
per share in 1994, adding more shareholder value to your investment in
Burlington Northern. At the same time, Santa Fe has reported record earnings
for 1994, and its Chairman, Rob Krebs, last week told the financial community
that Santa Fe's revenues will grow 7 percent and operating income will top
$500 million, a 15 percent increase in 1995.
Together, the Burlington Northern and Santa Fe is the right railroad
combination for the shareholders of both railroads, their customers and
employees. The current merger agreement offers real value, both in the short
term and in the long term, for BN shareholders. It will not be dilutive to
earnings once anticipated savings are realized. There is little, if any, risk
of the merger not being approved by the U.S. government. And it is likely now
that approval could take place in as little as 6 to 12 months after
shareholder approval, but no longer than 18 months.
The projected cost savings from combining these two great railroads,
along with the estimated increases in revenues, are expected to deliver
approximately $560 million of new operating income within three years
following consummation of the merger (this excludes certain non-cash items).
That means more shareholder value for your. Together, the BN-SF could be a
railroad approaching $8 billion in revenues, operating income exceeding $1.5
billion and an operating ratio near 79 percent at the time it opens for
business.
We're excited about the prospects for this new railroad to compete
for business and to offer existing and new customers access to new markets and
to single-line service that will be of exceptional quality and efficiency. As
a shareholder, this means more value to you in the form of a financially
stronger company that can provide increasingly greater returns on your
investment, both through share-price appreciation and dividends. Your Board
of Directors unanimously supports this merger.
Please sign, date and mail your proxy (the cream-colored card with
the blue stripe) today and vote FOR the merger with Santa Fe. Thank you for
your continued support.
Very truly yours,
/s/ Gerald Grinstein
--------------------
Gerald Grinstein
BURLINGTON NORTHERN INC. [LOGO NEWS]
Contact: Richard A. Russack (BN) FOR IMMEDIATE RELEASE
BURLINGTON NORTHERN AND SANTA FE ASK ICC
TO REVIEW MERGER APPLICATION IN 180 DAYS
FORT WORTH, Texas, January 30, 1995 - Burlington Northern Inc. (BN) and
Santa Fe Pacific Corp. (Santa Fe) Friday filed a petition asking for the
pending joint merger application of BN and Santa Fe to be reviewed under the
new 180-day timeline proposed on January 26 by the Honorable Gail McDonald,
chairman of the Interstate Commerce Commission (ICC). Chairman McDonald's
proposal, on behalf of the full ICC, came in testimony before the Railroad
Subcommittee on Transportation and Infrastructure.
ICC review of the application is pending shareholder approval by both
companies.
Shareholders are scheduled to vote on February 7, 1995.
In commenting on the ICC proposal, Gerald Grinstein, BN's chairman and
chief executive officer, applauded Ms. McDonald's initiative in seeking to
reduce the ICC timeline for review of railroad mergers. In this way,
railroads can be treated more like all other industries when seeking strategic
combinations, such as the merger between BN and Santa Fe.
###
