1
(a)(3)
[LOGO OF CSX] [LOGO OF CONRAIL]
CONTACTS:
CSX CORPORATION CONRAIL INC.
THOMAS E. HOPPIN CRAIG R. MACQUEEN
(804) 782-1450 (215) 209-4594
KEKST AND COMPANY ABERNATHY MACGREGOR GROUP
RICHARD WOLFF JOELE FRANK/DAN KATCHER
(212) 593-2655 (212) 371-5999
FOR IMMEDIATE RELEASE
CSX AND CONRAIL AMEND MERGER AGREEMENT
CSX RAISES CASH PORTION OF ITS AGREEMENT WITH CONRAIL TO $110 PER CONRAIL SHARE
CONRAIL BOARD UNANIMOUSLY APPROVES CSX AMENDED OFFER
CONRAIL BOARD UNANIMOUSLY REJECTS NORFOLK SOUTHERN'S OFFER
Richmond, Va., and Philadelphia, Pa., Nov. 6, 1996--CSX Corporation [NYSE: CSX]
and Conrail Inc. [NYSE: CRR] today announced that they have amended the terms of
their merger agreement. Under the revised terms, CSX has raised the cash portion
of its offer to $110 per Conrail share.
Conrail also announced that its board of directors carefully considered the
relative merits of a merger with Norfolk Southern rather than with CSX, and
unanimously reaffirmed that a merger with CSX is in Conrail's best interest and
is the superior strategic combination for Conrail. The Conrail board determined
that a transaction with Norfolk Southern is not in the best interest of Conrail
and its constituencies.
David M. LeVan, chairman, president and chief executive officer of Conrail,
said, "Our two companies have now agreed to significantly increase the value to
be received by the Conrail shareholders, and Conrail's other constituencies will
continue to get tremendous benefits resulting from the CSX merger.
"On Oct. 14, 1996, the Conrail board unanimously approved a merger of equals
with CSX to create one of the world's leading transportation and logistics
companies," Mr. LeVan continued. "That transaction provided value to our
shareholders at the high-end of what has been paid in other railroad mergers,
and it clearly was and is in the best interests of Conrail and its
constituencies. Before approving that merger, we carefully considered the
relative merits of a merger with Norfolk Southern rather than with CSX, and
we unanimously determined that a merger with CSX was in Conrail's best interest
and was the superior
2
strategic combination for Conrail. In making that decision we were fully aware
that Norfolk Southern had expressed an interest in acquiring Conrail. We have
now reaffirmed that decision."
John W. Snow, CSX chairman, president and chief executive officer, said, "Our
decision to increase the cash portion of the offer not only reflects CSX's
commitment to completing the transaction, but also accounts for the increased
value we have determined will be realized through the merger. Further analysis
by our management team, working with its counterpart at Conrail, has identified
at least $730 million in synergies and cost savings, $180 million more than
originally anticipated.
"Following the combination of our two companies, we expect immediate net traffic
benefits of about $165 million and cost savings totaling approximately $565
million," continued Mr. Snow. "Importantly, we will realize these benefits
rapidly by working closely together. This is especially significant since
Conrail shareholders who receive CSX shares as consideration for their shares,
will benefit from what we expect will be a substantial increase in the value of
those shares.
"Furthermore, it is apparent that the merger between CSX and Conrail will
produce signification public policy benefits. The service and pricing advantages
we will offer shippers will reduce truck traffic along the now congested
interstate corridors throughout the region. We also will be able to provide a
safer, more reliable operating environment for passenger services. Only the
CSX/Conrail combination offers so many significant benefits to customers and the
greater public," Mr. Snow added.
"The hostile Norfolk Southern bid is burdened with a series of significant
conditions. Given all the obstacles in the path of Norfolk Southern's bid,
Conrail shareholders would have to wait a prolonged amount of time to receive
payment for their shares. Meanwhile, the CSX/Conrail combination offers an
immediate opportunity to move forward together creating real, substantive value
for both Conrail and CSX shareholders.
"The merger of CSX and Conrail is driven by a compelling logic. Together, CSX
and Conrail will create the leading global freight transportation and logistics
management company and provide dramatically improved rail service to our
customers east of the Mississippi. Shippers and receivers throughout the region
will benefit from significantly enhanced competition, much better service and
more competitive pricing. Our combined railroad will grow significantly and
operate with maximum efficiency," Mr. Snow said.
"Clearly, the combination of CSX and Conrail provides the best overall package
of benefits to our constituencies, including customers, the communities we
serve, and the public-at-large. We welcome the strong support of the Conrail
board of directors and look forward to a bright future as our new company moves
full speed into the 21st Century," concluded Mr. Snow.
The significant amendments to the CSX/Conrail merger agreement include:
- - The increase of the cash portion of the transaction to $110 per Conrail share.
The structure of the proposed merger will remain the same: 40 percent of the
fully diluted shares of Conrail's common stock and ESOP preferred stock will
be acquired at the new price and the remaining 60 percent will be exchanged
for CSX stock at the originally agreed-upon exchange ratio of 1.85619 CSX
shares for each Conrail share;
- - An extension by three months of the period of time during which the Conrail
board of directors cannot withdraw its support of the merger agreement or
agree to any competing transaction. As now extended, such provisions will run
until July 12, 1997; and
- - Neither party will engage in discussions or enter into any agreement with
other railroad companies (including Norfolk Southern) relating to trackage
rights or other concessions without the participation and agreement of the
other party.
Additionally, the Conrail Shareholders Meeting scheduled for Nov. 14 has been
canceled. The record date for a new shareholders meeting has been set at Dec. 5,
1996, and the shareholder meeting is
3
expected to be held in mid-December.
CSX's tender offer of $110 per Conrail share is for an aggregate of about 17.9
million shares of Conrail common stock and ESOP preferred stock, or
approximately 19.9 percent of the Conrail outstanding voting stock. The offer is
subject to certain customary conditions.
Under the terms of the CSX offer, as amended, the tender offer's expiration date
and withdrawal and proration rights are extended until Midnight EST, Nov. 20,
1996. As of the close of business on Nov. 5, 1996, 56,634 Conrail shares had
been tendered pursuant to the CSX offer.
CSX Corporation, headquartered in Richmond, Va., is an international
transportation company offering a variety of rail, container-shipping,
intermodal, trucking, barge and contract logistics management services.
Conrail, with corporate headquarters in Philadelphia, Pa., operates an
11,000-mile rail freight network in 12 northeastern and midwestern states, the
District of Columbia, and the Province of Quebec.
Attached is a fact sheet on the CSX/Conrail merger of equals, and additional
information regarding this announcement can be found on the companies' Web sites
on the Internet. CSX's home page can be reached at http://www.CSX.com. Conrail's
home page can be reached at http://www.CONRAIL.com.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FAST FACTS REGARDING THE CSX - CONRAIL MERGER
- The proposed CSX/CRR merger of equals will create a powerful strategic
alliance, the leading transportation company in the world with more than
$14 billion in revenue and operations serving more than 80 countries
around the globe.
- In addition to the railroad, the new company will include the nation's
largest container-shipping (Sea-Land Services) and barging (American
Commercial Barge Line) companies, its only full-service, coast-to-coast
intermodal company (CSX Intermodal) and one of the foremost contract
logistics management companies (Customized Transportation Services) in the
world.
- For employees and the communities within which they work and live, the
CSX/CRR merger of equals offers the combination of companies with
complementary business mixes, common corporation strategies and compatible
corporate cultures.
- CSX/CRR has agreed to locating the corporate headquarters of the new
company in Philadelphia; to leaving the operating headquarters of the CSXT
and Conrail rail companies in Jacksonville and Philadelphia for the
foreseeable future; to a board comprised of an equal number of directors
from each company; and to a defined succession plan that insures the
management and employees, shareholders, customers and communities served
by both companies will have powerful roles and strong voices in the future
of the company.
- For shareholders, the CSX/CRR merger of equals offers ownership of an
international transportation company with the scale and efficiency at home
and abroad to compete effectively and generate attractive returns well
into the 21st Century.
- For customers, the CSX/CRR combination provides a 29,000 route mile rail
system that would span 22 states and offer vastly improved service to
virtually all major markets east of the Mississippi. Such a system will
provide the highest quality service to customers as a result of faster,
more reliable service, shorter routes, an improved cost structure, better
equipment supply and utilization and more single-line service.
- The proposed CSX/CRR merger of equals allows realization of public policy
benefits that cannot be accomplished through any other combination.
4
- More passenger trains will use the combined CSX/CRR rail system than
any other in the United States. These include not only Amtrak's, but
also those operated by commuter services in Boston, New York,
Philadelphia, Baltimore and Washington. Freight and passenger trains
currently share the same tracks in these areas. Improved coordination,
scheduling and operation of freight and passenger services will reduce
delays and improve safety and service for passengers. Similar options
may exist in other parts of the combined system in the future as
hard-pressed urban planners increasingly turn to rail transportation
to relieve highway congestion, save scarce public resources and
improve air quality.
- The proposed CSX/CRR merger of equals offers improved rail competition
to Northeast and Midwest markets and an opportunity to improve the
social and economic benefits of the entire transportation
infrastructure of the region through increased, more effective
competition with the trucking industry and through additional
intermodal cooperation.
CSX's internet address is http://www.csx.com
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------