SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act
Date of Report (Date of Earliest event reported): October 5, 1994
SANTA FE PACIFIC CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-8627 36-3258709
(Commission File Number) (I.R.S. Employer
Identification No.)
1700 East Golf Road, Schaumburg, Illinois 60173-5860
(Address of Principal Executive Offices) (Zip Code)
(708) 995-6000
(Registrant's Telephone Number, Including Area Code)
(Not Applicable)
(Former Name or Former Address, If Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
Union Pacific Corporation issued a press release dated
October 5, 1994 concerning its proposal of a merger of Union
Pacific Corporation and Santa Fe Pacific Corporation, which press
release is attached as Exhibit 99.1 and is hereby incorporated by
reference.
Santa Fe Pacific Corporation issued a press release dated
October 6, 1994 announcing the decision of its board of directors
to reject Union Pacific Corporation's proposal, which press
release is attached as Exhibit 99.2 and is hereby incorporated by
reference.
Burlington Northern Inc. issued a press release dated
October 6, 1994 concerning the reaffirmation of the commitment by
the board of directors of Burlington Northern Inc. to consummate
the merger of Burlington Northern Inc. and Santa Fe Pacific
Corporation as announced on June 30, 1994, which press release is
attached as Exhibit 99.3 and is hereby incorporated by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
See Exhibit Index included herewith at E-1.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
SANTA FE PACIFIC CORPORATION
(Registrant)
Date: October 7, 1994 By: /s/ Denis E. Springer
----------------------------
(Signature)
Denis E. Springer
Senior Vice President and
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
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EXHIBIT
NUMBER Description of Exhibit
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99.1 Union Pacific Corporation press release dated
October 5, 1994.
99.2 Santa Fe Pacific Corporation press release dated
October 6, 1994.
99.3 Burlington Northern Inc. press release dated October 6,
1994.
E-1
Exhibit 99.1
UNION PACIFIC CORP. PROPOSES COMBINATION WITH SANTA FE PACIFIC
OFFERS $18 PER SHARE IN UNION PACIFIC SHARES
Combination Provides Significant Public Interest Benefits
BETHLEHEM, PA, October 5 - Union Pacific Corporation (NYSE:
UNP) today proposed a merger of Union Pacific and Santa Fe
Pacific Corporation (NYSE: SFX). Stockholders of Santa Fe would
receive .344 shares of union Pacific stock, valued at $18.00 per
share of Santa Fe stock, based on the closing price of Union
Pacific stock on Tuesday, October 4, 1994.
The price, which values Santa Fe stock at approximately $3.4
billion, represents a 38 percent premium over the closing price
of Santa Fe on Tuesday, October 4. It also is 33 percent higher
than the offer to Santa Fe shareholders from Burlington Northern,
Inc. (NYSE: BNI) based on the recent trading price of Burlington
stock, under the previously announced BN/Santa Fe merger
agreement. Union Pacific's stock offer will be tax-free to Santa
Fe shareholders.
Drew Lewis, Chairman and Chief Executive Officer of Union
Pacific, said, "We have a proposal that is not only good for
Santa Fe shareholders, but will also benefit Union Pacific
shareholders by ensuring we are the premier railroad in the
United States."
Union Pacific said the proposal that Mr. Lewis delivered to
Santa Fe's Chairman and Chief Executive Officer, Robert D. Krebs
will:
. Bring greater benefits to customers than a BN/Santa Fe
combination,
. Do more to strengthen rail competition in the West, and
. Provide superior compensation to Santa Fe stockholders.
Major Service Improvements, Much Larger Savings and Efficiencies
"This is an unprecedented opportunity for the entire rail
industry to make a quantum leap towards a 21st century
transportation system, one that will maximize service to
customers, encourage greater competition and improve efficiency,"
said Mr. Lewis.
"There can be no doubt we must have innovative, financially
strong companies to shape an increasingly efficient
transportation system," he said. "While carefully thought-out
mergers can create such companies, the combinations must be those
that provide the greatest benefits, and that strengthen rail
competition. Our careful study of the current situation
convinced us that a Union Pacific-Santa Fe combination will
produce major service improvements that a BN/Santa Fe merger
<PAGE>
cannot, with more new single-line service and greater savings and
efficiencies."
Mr. Lewis said the Union Pacific-Santa Fe combination also
will strengthen western rail competition in a way the BN/Santa Fe
merger would not. He explained that to ensure a major
enhancement of western rail competition, Union Pacific will agree
in advance to grant conditions to Southern Pacific, Burlington or
other railroads to maintain rail competition in the California-
Midwest corridor, in the Kansas/Oklahoma grain markets and at
locations that would otherwise go from two serving railroads to
one. "We will work with the customers and the Interstate
Commerce Commission (ICC) to ensure stronger rail competition in
all affected markets," said Mr. Lewis. "With the dramatic
increase in competitiveness that will be provided by a Union
Pacific-Santa Fe system compared with a BN/Santa Fe system, and
reinforcement of additional railroad competition through
conditions, this transaction is in the best interests of
customers, employees, shareholders of both companies and the
public"
Public Interest Benefits
Among the public interest benefits of Union Pacific's
proposal are:
. Significant improvements in schedules, frequency and
reliability of service, by combining volumes and using
the best of Union Pacific and Santa Fe routes and
facilities, reducing customer inventory carrying costs;
. Diversion of highway business to rail by use of common
terminals, preferred routes and increased departure
frequency in key corridors, giving customers
significant market entry opportunities;
. Significantly increased freight car availability, and
shorter equipment turnaround times, through joint fleet
management and more efficient train operations. This
would greatly reduce customer freight car capital
costs;
. Major savings from facility consolidations, lower
overheads, and use of shorter routes;
. Creation of the first distribution network supporting
virtually the entire automobile market west of the
Mississippi river, all on one railroad;
. Establish a single intermodal network linking all
Eastern Gateways with the west and Gulf Coast ports and
the growing Mexican market.
"We have requested that Santa Fe's board consider our
<PAGE>
proposal as soon as possible," said Lewis. "We are prepared to
start negotiations of a definitive agreement immediately."
Based on 1993 public figures, the combined railroads would
have revenues of approximately $7.4 billion, operating income of
$1.36 billion and more than 43,000 employees. Assets would be
$14.9 billion, including 26,371 route miles, 4,887 locomotives
and 97,654 freight cars.
On June 29, 1994, Burlington and Santa Fe entered into a
merger agreement which calls for Burlington to merge with Santa
Fe, with Burlington being the surviving corporation. The closing
of the BN/Santa Fe merger, and the receipt of the merger
consideration by Santa Fe's shareholders, is subject to, among
other things, ICC approval and the approval of the shareholders
of Burlington and Santa Fe. Pursuant to the merger agreement
with Burlington, Santa Fe shareholders would receive .27 shares
of Burlington stock for each share of Santa Fe stock, for a value
of $13.50 per Santa Fe share, based on Burlington's closing price
on October 4.
Union Pacific's proposal, like Burlington's, is contingent
upon ICC approval. While ICC approval is a significant matter
for either transaction, Union Pacific believes it can present
strong arguments to the Commission on the transaction's benefits
to customers and the rail industry.
The Union Pacific proposal is subject to termination of the
merger agreement between Burlington and Santa Fe in accordance
with the terms of that agreement, approval of the mutually
satisfactory merger agreement by both Boards of Directors, and
approval by shareholders of both companies.
Attached is the full test of a letter from Mr. Lewis to Mr.
Krebs on the proposal.
<PAGE>
Union Pacific Corporation
October 5, 1994
Mr. Robert D. Krebs
Chairman, President & CEO
Santa Fe Pacific Corporation
1700 E. Golf Road
Schaumburg, IL 60173
Dear Rob:
I would like to thank you for meeting with Dick and me
earlier today to discuss a possible combination of our two
companies. We have long admired Santa Fe and your excellent
management and work force. As we discussed, we at Union Pacific
believe that combining the strengths of Santa Fe and Union
Pacific Represents an extraordinary opportunity for our two
companies, our respective shareholders, customers and employees,
and the railroad industry.
I was disappointed by your unwillingness to consider our
proposal. As I mentioned, we view this transaction as a
strategic imperative. Accordingly, I am writing to submit the
following proposal to combine our companies. Because of the very
significant benefits that it would provide to your Company, your
shareholders and other constituencies, we ask that you and your
Board of Directors give careful consideration to our proposal.
<PAGE>
Mr. Robert D. Krebs
October 5, 1992
Page 2
Terms
We propose that Union Pacific acquire Santa Fe in a merger
in which Santa Fe shareholders would receive, for each of their
shares, .344 of a share of Union Pacific common stock, having a
value of $18 per Santa Fe share based on yesterday's closing
price of Union Pacific stock.
This price represents a premium of 38% over yesterday's
closing price of Santa Fe common stock. Our proposed price also
represents a premium of 33% over the current value of the
Burlington Northern transaction, which was endorsed by your
financial advisors as fair to your shareholders.
In addition to receiving a substantial premium, your
shareholders would be able to participate in an exceptional
opportunity for growth and increased value through their ongoing
interest in what we believe would be the preeminent railroad
company in the country.
Our proposed transaction would be tax-free to both our
companies and to your shareholders. This would allow your
shareholders to defer paying tax, or recognizing gain or loss on
their shares, until they sell their shares at a time of their
choice.
<PAGE>
Mr. Robert D. Krebs
October 5, 1994
Page 3
Benefits of Transaction
In addition to providing superior benefits for your
shareholders, we believe our transaction will provide greater
benefits to the shipping public and will do more to strengthen
rail competition in the west than the Burlington Northern
transaction. A Union Pacific/Santa Fe combination will produce
service breakthroughs that a Burlington Northern-Santa Fe merger
cannot, including more new single-line service and greater
savings and efficiencies. To insure that our transaction will
strengthen rail competition in all affected markets, we are
prepared to grant conditions to Southern Pacific, Burlington
Northern or other railroads, including access to points that
would otherwise change from two serving railroads to one, rights
to handle service-sensitive business moving between California,
Chicago and the Midwest, and access to the Kansas and Oklahoma
grain markets.
Continuity of Management
We have great respect for your management and employees and
believe they would make important contributions to our combined
company. We envision that certain members of the Santa Fe Board
would be invited to serve on Union Pacific's Board. This
participation would facilitate the integration and growth of the
two companies.
<PAGE>
Mr. Robert D. Krebs
October 5, 1994
Page 4
Process
Our Board of Directors strongly supports the proposed
transaction and has authorized management to pursue this proposal
with you. We are prepared to immediately commence negotiation of
a definitive merger agreement containing mutually agreeable terms
and conditions.
We have conducted an extensive analysis of Santa Fe based on
publicly available information. While our proposal is
necessarily subject to confirmation, through appropriate due
diligence, that our understanding of Santa Fe based on publicly
available information is accurate, we expect that such due
diligence will confirm our view of Santa Fe and its prospects.
We recognize that you will need to conduct a due diligence review
of Union Pacific and its operations, and we are ready to
facilitate that process.
Our transaction, like the proposed Burlington Northern
merger, is contingent upon ICC approval. Although this is a
significant matter for either transaction, we believe that,
working together, we can present strong arguments to the
Commission as to the benefits of our transaction to customers and
the industry.
Our proposal also would be subject to termination of your
merger agreement with Burlington Northern, in accordance with the
terms of that agreement, approval of a mutually satisfactory
merger agreement by our respective Board of Directors, and
approval of our respective shareholders.
<PAGE>
Mr. Robert D. Krebs
October 5, 1994
Page 5
Along with our financial advisor, CS First Boston
Corporation, and our legal advisor, Skadden, Arps, Slate, Meagher
& Flom, we look forward to meeting with you and your advisors to
discuss our proposal and to working to implement this
transaction. WE have the opportunity to build the best railroad
in the country and to provide significant immediate and long-term
benefits for your shareholders.
I am hopeful your Board will conclude that your shareholders
should not be denied the opportunity to consider this offer. We
at Union Pacific are determined to take every appropriate action
to pursue this transaction. In view of the importance of this
matter, time is of the essence and we await your earliest
possible response.
Please call me as soon as possible so we can get together to
discuss this matter in detail.
Sincerely,
DL/mi
EXHIBIT 99.2
SANTA FE PACIFIC CORPORATION NEWS
1700 East Golf Road
Schaumburg, Illinois 60173-5860
708-995-6274
PUBLIC RELATIONS
FOR IMMEDIATE RELEASE MEDIA CONTACT: Catherine Westphal
#48 (708) 995-6273
SANTA FE PACIFIC REJECTS UNION PACIFIC PROPOSAL
SCHAUMBURG, ILLINOIS, OCTOBER 6, 1994 -- Santa Fe Pacific
Corporation announced today that its board of directors voted
unanimously to reject Union Pacific Corporation's unsolicited
conditional proposal to acquire Santa Fe.
Union Pacific has proposed an exchange of .344 of a share of
Union Pacific common stock for each Santa Fe share, having a
value of approximately $17 per Santa Fe share, based on the
October 6, 1994 closing price of Union Pacific stock.
The Santa Fe Pacific board reaffirmed its commitment to its
previously announced merger with Burlington Northern Inc., which
the company believes will generate significant public and
shareholder benefits, and will therefore be approved by the
Interstate Commerce Commission.
Robert D. Krebs, chairman, president and chief executive
officer, stated his belief that the Union Pacific proposal is
unlikely to achieve ICC approval and is motivated more by a
desire to derail the Burlington Northern/Santa Fe merger than to
achieve its own transaction with Santa Fe.
-more-
<PAGE>
SFP
Page 2
Krebs went on to say that, earlier this year, he returned an
unsolicited telephone call from Drew Lewis, chairman and chief
executive officer of Union Pacific, in which Lewis stated that if
Santa Fe made its deal with Burlington Northern, Union Pacific
would not oppose it. Krebs said that Santa Fe had relied on
Lewis' assurance when it proceeded with the Burlington Northern
transaction. Union Pacific has now decided to interject a
proposal which has little chance of being consummated because
Union Pacific does not want to compete with a merged Burlington
Northern Santa Fe Railway.
At the conclusion of a meeting with Krebs yesterday evening,
Lewis said that Union Pacific might offer more -- $20 per share
-- and would consider using a voting trust for the proposed
transaction. Union Pacific's written proposal and press release
are inconsistent with these comments. If Union Pacific makes a
proposal at a fair price and with an adequate provision for a
voting trust that would substantially eliminate the regulatory
risk for Santa Fe shareholders, Santa Fe would consider that
proposal in light of its fiduciary duties.
###
EXHIBIT 99.3
BURLINGTON NORTHERN INC. NEWS
Contact: Dick Russack
(202) 828-3663
FOR IMMEDIATE RELEASE
BURLINGTON NORTHERN BOARD REAFFIRMS COMMITMENT
TO SANTA FE MERGER
Fort Worth, TX, Oct. 6 - The Board of Directors of Burlington
Inc. (BN) today repeated its commitment to consummate the merger
of BN and Santa Fe Pacific Corporation (Santa Fe), as announced
on June 30. The Board reaffirmed its intent to file the Santa Fe
merger application with the Interstate Commerce Commission (ICC)
next week.
BN said the UP proposal would eliminate choice and competition
for customers throughout the west and increase UP's existing
dominance in the Western United States. Among its many adverse
impacts, the UP proposal would eliminate Santa Fe's competition
to the UP on the critical Chicago and Midwest to California
route. In addition, many Kansas and Oklahoma wheat farmers would
be captive to the UP to move their crops to Gulf ports.
While the BN - Santa Fe merger is an end-to-end combination, more
than 5,000 of Santa Fe's 8,500-mile route system parallels and
overlaps UP's system, which means less competition and greater
employee impact. The UP and Santa Fe systems are essentially
parallel from Los Angeles to Chicago and from Kansas to Texas.
Savings from the UP proposal will come at the expense of rail
service, employment and facility reductions due to overlapping
systems.
BN pointed out that the Union Pacific (UP) has conceded that its
proposal will not receive ICC approval without massive protective
arrangements for other carriers. UP wrongly believes that
negotiating with other carriers will eliminate the substantial
anti-competitive impacts of the merger. In contrast, the BN-
Santa Fe merger enhances competition.
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