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CONRAIL INC.
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NORFOLK SOUTHERN CORPORATION
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FOR IMMEDIATE RELEASE
December 27, 1996
Media Contact: Robin Chapman
757-629-2713
NS ASKS STB TO RULE CSX-CONRAIL "LOCK-OUT" PROVISION UNLAWFUL
NORFOLK, VA -- Norfolk Southern Corporation (NYSE: NSC) today
asked the Surface Transportation Board to rule that a December 18
amendment to the merger agreement between CSX and Conrail
constitutes unlawful control by one railroad over another.
The amendment prohibits Conrail, without CSX's consent, from
entering into or discussing a merger agreement with any other
company until 1999, even if Conrail shareholders or the STB
disapprove the proposed CSX merger.
"Unless the Board intervenes to protect its jurisdiction
over the control of one rail carrier by another," Norfolk
Southern said in its petition to the STB, "CSX will be able to
use the unlawful control afforded by the lock-out provision to
coerce a critical vote of Conrail stockholders scheduled for
January 17, 1997, by portraying CSX as the only choice available
to them -- even though the terms of CSX's acquisition would
provide Conrail's shareholders other than CSX $1.16 billion less
than Norfolk Southern's offer and even though a CSX-Conrail
consolidation on its face presents extremely serious competitive
issues, as CSX officials acknowledged years ago in testimony to
Congress."
Norfolk Southern said that while provisions are commonly
used in merger agreements that allow the merging parties time to
secure needed corporate and regulatory approvals to consummate
the transaction, a "lock-out" extending more than one year after
the expected date of the STB's final decision on the CSX-Conrail
merger is "extraordinary and wholly unjustified" and is intended
to coerce Conrail shareholders to approve the transaction.
"The obvious and only intent of the amended lock-out
provision is to preclude even the possibility of NS's superior
offer from being realized for so long that Conrail shareholders
will feel that they are left with no other effective choice but
to accept the CSX merger," Norfolk Southern said.
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