SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
(Amendment No. 10)
Tender Offer Statement Pursuant to Section 14(d)(1)
of the Securities Exchange Act of 1934
Conrail Inc.
(Name of Subject Company)
Norfolk Southern Corporation
Atlantic Acquisition Corporation
(Bidders)
Common Stock, par value $1.00 per share
(Including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
208368 10 0
(CUSIP Number of Class of Securities)
Series A ESOP Convertible Junior
Preferred Stock, without par value
(Including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
Not Available
(CUSIP Number of Class of Securities)
James C. Bishop, Jr.
Executive Vice President-Law
Norfolk Southern Corporation
Three Commercial Place
Norfolk, Virginia 23510-2191
Telephone: (757) 629-2750
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
with a copy to:
Randall H. Doud, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
This Amendment No. 10 amends the Tender Offer Statement on
Schedule 14D-1 filed on October 24, 1996, as amended (the "Schedule
14D-1"), by Norfolk Southern Corporation, a Virginia corporation
("Parent"), and its wholly owned subsidiary, Atlantic Acquisition
Corporation, a Pennsylvania corporation ("Purchaser"), relating to
Purchaser's offer to purchase all outstanding shares of (i) Common Stock,
par value $1.00 per share (the "Common Shares"), and (ii) Series A ESOP
Convertible Junior Preferred Stock, without par value (the "ESOP Preferred
Shares" and, together with the Common Shares, the "Shares"), of Conrail
Inc. (the "Company"), including, in each case, the associated Common Stock
Purchase Rights, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated October 24, 1996 (the "Offer to Purchase"), as
amended and supplemented by the Supplement thereto, dated November 8, 1996
(the "Supplement"), and in the revised Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the
"Offer"). Unless otherwise defined herein, all capitalized terms used
herein shall have the respective meanings given such terms in the Offer to
Purchase, the Supplement or the Schedule 14D-1.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
Item 5 is hereby amended and supplemented by the following:
On November 15, 1996, an editorial written by David R. Goode,
Chairman, President and Chief Executive Officer of Parent (the "Editorial")
was published in the Journal of Commerce. The Editorial discussed, among
other things, Parent's analysis of the perceived competitive benefits of
the Offer and the Proposed Merger as compared with the Proposed CSX
Transaction. In addition, Parent indicated its willingness to sell certain
of its New York/New Jersey rail assets to preserve competition. A copy of
the text of the Editorial is filed as an exhibit hereto.
Item 7. Contracts, Arrangements, Understandings or Relationships With
Respect to the Subject Company's Securities.
Item 7 is hereby amended and supplemented by the following:
On November 18, 1996, the staff of the STB issued an informal,
nonbinding opinion to the effect that the Voting Trust Agreement, as
proposed by Parent to be modified to delete the "proportional voting"
provision modelled on CSX's proposed voting trust agreement, is consistent
with the policies of the STB against unauthorized acquisitions of control
of a regulated carrier. In the same opinion, the staff of the STB
reaffirmed its November 1, 1996 informal, nonbinding opinion concerning the
Voting Trust Agreement as originally proposed and rejected various
arguments submitted by the Company requesting the staff to rescind such
November 1 opinion. On this basis, Purchaser expects that the Voting Trust
Approval Condition will be satisfied.
On the basis of a confirmation from the Premerger Office of the
FTC that the Offer and the Proposed Merger are not subject to, or are
exempt from, the HSR Act, Purchaser also expects that the HSR Condition
will be satisfied.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended and supplemented by the following:
(a)(44) Text of Editorial published on November 15, 1996.
(a)(45) Text of Advertisement appearing in newspapers
commencing November 18, 1996.
SIGNATURE
After due inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement
is true, complete and correct.
November 18, 1996
NORFOLK SOUTHERN CORPORATION
By: /s/ JAMES C. BISHOP, JR.
Name: James C. Bishop, Jr.
Title: Executive Vice President-Law
ATLANTIC ACQUISITION CORPORATION
By: /s/ JAMES C. BISHOP, JR.
Name: James C. Bishop, Jr.
Title: Vice President and General Counsel
EXHIBIT INDEX
Exhibit
Number Description Page
(a)(44) Text of Editorial published on November 15, 1996.
(a)(45) Text of Advertisement appearing in newspapers
commencing November 18, 1996.
Rail Mergers: Norfolk Southern should join Conrail
by David R. Goode
In war, it makes little sense to achieve victory or peace if, in
the process, you have "made a desert," as one victim of the
expansion-minded Roman Empire observed.
The same is true in business, especially in the railroad
business. Mergers that do not promote healthy competition hurt the
producers and shippers of raw and manufactured goods, as well as the
eventual consumers of those products.
With this in mind, it is easy to see why Norfolk Southern's bid
to purchase Conrail is superior to that of CSX's. Our bid encourages
balanced rail competition, while CSX's ignores the issue. Consider these
fundamentals:
Competition requires rail systems of comparable size and scope.
Railroading is a network business with increasing economies of scale. In a
global economy, significantly smaller competitors can be handicapped.
Today, Norfolk Southern and CSX are roughly at parity, one with 45% and the
other with 55% of their combined business. A CSX-Conrail combination would
produce a lopsided 70-30 disparity, while an NS-Conrail combination would
be closer to a more balanced 60-40 split (which we are willing to work to
reduce even further).
Competition requires that the largest markets be served by two
railroads. Shippers want to move traffic between points A and Z -- not from
A to B. If one railroad has the biggest markets to itself, shippers will
have to use that railroad. A quick look at the railroad map reveals that NS
has fewer routes and markets that overlap Conrail than does CSX. An
NS-Conrail combination would give more markets the benefits of competing
rail service.
Competition requires that railroads own their own routes.
Trackage rights can work as shortcuts and in other special situations, and
NS uses them when appropriate. But a railroad that owns its own lines has
the incentive to make the investment in maintenance that is essential to
providing safe, efficient and competitive service. When NS acquires
Conrail, we will offer to sell CSX a line into New York/New Jersey,
preserving real competition in one of the world's largest markets.
Competition requires effective terminal access. It doesn't do
any good to ride the train if you can't get off. That's why railroads need
access to yards and intermodal and multimodal terminals in order to be
competitive.
NS acknowledges every railroad's need to buy, build, operate and
access its own terminal facilities.
Competition is not free. Indeed, it is weakened when less than
fair value is paid for assets. Norfolk Southern's all-cash offer of $100 a
share easily exceeds CSX's cash and stock offer valued at less than $90 a
share. Our competitors will have to pay fair price for any assets they
acquire from us, based on a formula that factors in revenues and reflects
the costs of the acquisition to NS.
Norfolk Southern's focus on the competitive issues relating to
Conrail is not altruistic. As the nation's most efficient railroad year-in
and year-out, we support balanced competition because we know we will
perform well in such an environment. Balanced competition will benefit our
customers, our shareholders, our employees and the communities we serve.
Balanced competition won't create a Roman desert -- but rather an oasis in
which everyone can thrive.
[ADVERTISEMENT]
TO CONRAIL CONSTITUENCIES:
You Don't Have to Be
a Conrail Shareholder to Benefit
from Norfolk Southern's Offer
A Norfolk Southern/Conrail Combination
Will Be Better for All of Conrail's Constituencies
Better for Pennsylvania and Philadelphia:
PHILADELPHIA JOBS: Norfolk Southern is committed to maintaining a
major operating presence in Philadelphia. Don't be fooled by CSX's
offer to keep Conrail headquarters in Philadelphia.
CSX's headquarters in Richmond, VA employs under 200 people, and a
Philadelphia headquarters under CSX ownership would require no more
jobs and perhaps fewer. CSX has made no guarantees regarding the other
Philadelphia- based Conrail jobs - they could go to Jacksonville,
Florida, where CSX's operations are centralized. If Conrail will
negotiate, Norfolk Southern will consider Philadelphia as a site for a
real headquarters.
PHILADELPHIA NAVY BASE: Norfolk Southern has made public plans for a
multimodal rail-highway facility at the dormant Philadelphia Navy
Base. Norfolk Southern's CEO, David R. Goode, already discussed this
opportunity with Philadelphia's Mayor Rendell.
ALTOONA AND HOLLIDAYSBURG SHOPS: Norfolk Southern is committed to
continuing to operate Conrail's Hollidaysburg Car Shop and its Juniata
Loco- motive Shop at Altoona, and will promote employment there.
Norfolk Southern will aggressively pursue work from other equipment
owners to increase the work handled by these two shops.
What has CSX promised? Nothing. And, don't forget that CSX's
locomotive shops at Cumberland, Maryland, are less than 70 miles from
Conrail's Altoona and Hollidayburg shops.
Better For Shippers:
EFFICIENT AND SAFE: Norfolk Southern is the safest, most efficient
major railroad in the country. That means service you can trust at a
competitive price.
BALANCED COMPETITION: A Norfolk Southern/Conrail merger will pro- mote
balanced competition, and a choice of rail carriers.
A CSX/Conrail merger would perpetuate the rail monopoly in New York
and extend that Class 1 rail monopoly into a new "no-competition zone"
extending from eastern Ohio to the Atlantic coast.
INNOVATION: Norfolk Southern created the innovative Triple Crown
intermodal network, which pioneered RoadRailer [with Trademark Symbol]
technology, and invested in the Northeast to raise clearances for
efficient double- stack intermodal service. Auto companies trust
Norfolk Southern to help redefine their distribution systems, and
Conrail customers can enjoy the benefits of these innovations. CSX
promised new intermodal service, but their main routes to the
Northeast won't even clear double-stack railcars -- Norfolk Southern's
routes already do.
Better For Employees:
COMPLEMENTARY FIT: Norfolk Southern's tracks and facilities extend and
complement Conrail's, with minimal overlap -- resulting in maximum
opportunity for maintaining employment.
On the other hand, CSX and Conrail are parallel from Ohio to
Philadelphia and elsewhere, too. For example, Conrail and CSX would
control almost all rail transportation to the vital Pittsburgh
industrial center.
SAFETY: Norfolk Southern has been certified as the safest major
railroad in the country for the past seven years. Behind these
statistics are safer working conditions and dedicated employees with
fewer injuries. For Norfolk Southern, the safety of our employees and
our communities is our number one priority.
HEALTHY PENSION FUNDS: Norfolk Southern and Conrail can both boast
overfunded pension funds, ensuring peace of mind for retirees. CSX's
claim to fame is its recent recognition as one of the "Top 50
Companies with the Largest Underfunded Pension Liability"1. CSX could
merge its anemic fund with Conrail's, thereby using money accumulated
for Conrail employees to fund CSX's promises to its own employees.
Better for Shareholders:
MORE CASH: Norfolk Southern is offering $110 cash per share for 100%
of Conrail's shares. This is significantly greater than CSX's
cash/stock offer, which has a blended value of $93.42 per share.2
NO EQUITY RISK: Norfolk Southern will pay cash for 100% of Conrail's
shares. CSX's offer forces shareholders to bear a continued equity
risk for 60% of Conrail shares.
NO REGULATORY RISK: Norfolk Southern will assume the risks of
regulatory delay; Conrail shareholders won't have to. CSX would make
Conrail sharehold- ers carry the entire risk of regulatory delay or
disapproval on the 60% back-end of Conrail shares.
When and How Has Conrail Weighed These Benefits?
o Conrail refuses to talk to Norfolk Southern.
o Conrail refuses to let constituencies consider for themselves a
Norfolk Southern transaction.
o Conrail is blocking all its constituencies from receiving the
greater bene- fits of a merger with Norfolk Southern.
- --------
1 Pension Benefit Guaranty Corporation: News Release 96-16, 12/6/95
2 Based on the closing sale price of CSX common stock on November
15, 1996
Please join the many Conrail shareholders who are demanding
that the Conrail Board stop putting its own interests ahead of
everyone else's.
[Norfolk Southern Logo]
Important: If you have any questions, please call our
solicitor, Georgeson & Company Inc. toll free at 1
800-223-2064. Banks and brokers call 212-440-9800.
November 18, 1996
