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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
to
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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CONRAIL INC.
(Name of Subject Company)
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CONRAIL INC.
(Name of Person(s) Filing Statement)
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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)
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Series A ESOP Convertible Junior Preferred Stock, without par value
(including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
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James D. McGeehan
Corporate Secretary
Conrail Inc.
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania 19101
(215) 209-4000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Robert A. Kindler, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
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INTRODUCTION
Conrail Inc. ("Conrail") hereby amends and supplements its
Solicitation/Recommendation Statement on Schedule 14D-9, originally
filed on December 6, 1996, and amended on December 12, 1996 (as
amended, the "CSX Schedule 14D-9") with respect to an offer by Green
Acquisition Corp., a Pennsylvania corporation ("Purchaser") and a
wholly owned subsidiary of CSX Corporation, a Virginia corporation
("CSX"), to purchase up to an aggregate of 18,344,845 Shares of
Conrail. Capitalized terms not defined herein have the meanings
assigned thereto in the CSX Schedule 14D-9.
Items 4 and 8 of the CSX Schedule 14D-9 are hereby amended and
supplemented by adding the following text at the end thereof:
On December 19, 1996, CSX and Conrail issued a press release,
pursuant to which they announced that they had entered into the Second
Amendment to the Merger Agreement dated as of December 18, 1996 (the
"Second Amendment") to, among other things, (i) increase the
consideration payable pursuant to the Merger, (ii) accelerate the
consummation of the Merger to immediately following the receipt of
applicable shareholder approvals and prior to Surface Transportation
Board approval and (iii) extend the period (the "Exclusivity Period")
during which the Conrail Board has agreed under the Merger Agreement
not to withdraw or modify its recommendations of the CSX Transactions,
approve or recommend any takeover proposal or cause Conrail to enter
into any agreement related to any takeover proposal to December 31,
1998.
On December 18, 1996, the Second Amendment was approved by the
Conrail Board and the disinterested members of the Conrail Board, with
one abstention. Mr. David B. Lewis advised the Conrail Board that
while he continues to fully support the Offer and the Merger, he
wished to abstain from the vote approving the Second Amendment in
light of the provision in the Second Amendment extending the
Exclusivity Period to December 31, 1998.
The Conrail Board continues to believe that a merger of equals
with CSX is in the best interests of Conrail; the Conrail Board
believes that the amended terms of the Merger Agreement represent a
significant improvement over the original terms of the CSX
Transactions.
The Conrail Board, including the disinterested members of the
Conrail Board, also reaffirmed its determination that the transactions
contemplated by the
Merger Agreement (such as the Offer and the Merger) are in the best
interests of Conrail (taking into account all the Conrail
constituencies affected by such proposed transactions, the short-term
and long-term interests of Conrail, the resources, intent and conduct
(past, stated and potential) of any person seeking to acquire control
of Conrail, and all other pertinent factors). Accordingly, the Conrail
Board recommends that the shareholders of Conrail who desire to
receive cash for a portion of their Shares tender their Shares
pursuant to the Offer.
The Conrail Board, including the disinterested members of
the Conrail Board, also determined that a sale of Conrail to Norfolk
would not be in the best interests of Conrail (taking into account all
the Conrail constituencies affected by such proposed transactions, the
short-term and long-term interests of Conrail, the resources, intent
and conduct (past, stated and potential) of any person seeking to
acquire control of Conrail, and all other pertinent factors).
Accordingly, the Conrail Board recommends that the shareholders of
Conrail not tender their Shares pursuant to the Norfolk Offer.
At the December 18 Conrail Board meeting, the Conrail Board
received fairness opinions from Lazard Freres and Morgan Stanley,
copies of which are attached hereto as Exhibits (a)(9) and (a)(10),
respectively, are incorporated herein by reference and qualify the
foregoing summary in its entirety.
In making the determinations and recommendations set forth
above, the Conrail Board considered the foregoing fairness opinions as
well as the same factors which previously led the Conrail Board to
recommend the Offer and the Merger.
The terms and conditions of the Offer and the Merger
Agreement (as amended) are described in the Offer to Purchase, as
supplemented by the Supplement to the Offer to Purchase dated December
19, 1996 (the "Supplement"), a copy of which is filed as Exhibit
(a)(11) hereto and is incorporated herein by reference. A copy of the
Second Amendment and a copy of the press release are attached hereto
as Exhibits (c)(10) and (a)(12), respectively, are incorporated herein
by reference and qualify the foregoing summary in its entirety.
On December 19, 1996, Norfolk announced that it had
increased the price offered in the Norfolk Offer to $115 per Share. On
December 20, 1996, Conrail issued a press release, announcing that the
Conrail Board has rejected the revised Norfolk Offer and continues to
recommend that Conrail shareholders not tender their shares pursuant
to the Norfolk Offer.
Norfolk Litigation. On December 13, 1996, Norfolk amended
its complaint to add claims (a) that any postponement by Conrail of
the Pennsylvania Special Meeting scheduled for December 23, 1996
(assuming such postponement was caused by Conrail having failed to
receive the requisite number of votes for approval) would be, and that
granting CSX the right to consent to such postponement was, a breach
of the fiduciary duties of the directors of Conrail, and (b) that CSX
has, in effect, acquired more than 20% of the Shares (within the
meaning of Subchapter 25E) by virtue of the allegation that shares
owned by CSX should be aggregated with Shares that could be voted by
directors of Conrail and, accordingly, that CSX is obligated to pay
"fair value" in cash, to be determined pursuant to Subchapter 25E, to
all shareholders of Conrail other than CSX. Norfolk also added
allegations to its Federal securities law claims that the defendants
had made misleading statements regarding the possibility that the
consideration being offered by CSX might be improved.
At a hearing on December 17, 1996, the Court granted a
limited injunction enjoining the defendants from postponing,
adjourning or not convening the Pennsylvania Special Meeting scheduled
for December 23, 1996, by reason of Conrail or its nominees not having
received sufficient proxies to assure approval of the Articles
Amendment. The Court specified that adjournment or postponement for
other reasons would be permissible under the injunction.
Item 9. Materials to be filed as Exhibits.
Item 9 of the CSX Schedule 14D-9 is hereby amended and
supplemented by adding the following text thereto:
(a)(9) Opinion of Lazard Freres & Co. LLC dated December 18,
1996.
(a)(10) Opinion of Morgan Stanley & Co. Incorporated dated
December 18, 1996.
(a)(11) Supplement to the Offer to Purchase dated December 19,
1996 (incorporated by reference to Exhibit (a)(15) to
the 14D-1).
(a)(12) Text of press release issued by CSX and Conrail dated
December 19, 1996.
(a)(13) Text of press release issued by Conrail dated December
20, 1996.
(c)(10) Second Amendment to Agreement and Plan of Merger dated
as of December 18, 1996 (incorporated by reference to
Exhibit (c)(6) to the 14D-1).
(c)(11) Form of Amended and Restated Voting Trust Agreement
(incorporated by reference to Exhibit (c)(7) to the
14D-1).
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
CONRAIL INC.
By /s/ Timothy T. O'Toole
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Name: Timothy T. O'Toole
Title: Senior Vice President--Finance
Dated as of December 20, 1996
EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
*(a)(1) Offer to Purchase dated December 6, 1996
(incorporated by reference to Exhibit (a)(1) to
CSX's and Purchaser's Tender Offer Statement on
Schedule 14D-1 dated December 6, 1996, as
amended (the "CSX
14D-1"))........................................
*(a)(2) Letter of Transmittal (incorporated by
reference to Exhibit (a)(2) to the CSX
14D-1)..........................................
*(a)(3) Text of press release issued by CSX dated
December 6, 1996 (incorporated by reference to
Exhibit (a)(7) to the CSX
14D-1)..........................................
*(a)(4) Letter to shareholders of Conrail dated
December 6,
1996............................................
*(a)(5) Form of Summary Advertisement dated December 6,
1996 (incorporated by reference to Exhibit
(a)(5) to the CSX
14D-1)..........................................
*(a)(6) Opinion of Lazard Freres & Co. LLC
(incorporated by reference to Exhibit (a)(14)
to the Solicitation/ Recommendation Statement
on Schedule 14D-9 of Conrail dated October 16,
1996, as amended, relating to the First Offer
(the "First
14D-9"))........................................
*(a)(7) Opinion of Morgan Stanley & Co. Incorporated
(incorporated by reference to Exhibit (a)(15)
to the First
14D-9)..........................................
*(a)(8) Text of press release issued by Conrail and CSX
dated December 10,
1996............................................
(a)(9) Opinion of Lazard Freres & Co. LLC dated
December 18,
1996............................................
(a)(10) Opinion of Morgan Stanley & Co. Incorporated
dated December 18,
1996............................................
(a)(11) Supplement to the Offer to Purchase dated
December 19, 1996 (incorporated by reference to
Exhibit (a)(15) to the
14D-1)..........................................
(a)(12) Text of press release issued by CSX and Conrail
dated December 19, 1996.........................
(a)(13) Test of press release issued by Conrail dated
December 20,
1996............................................
Exhibit Description Page No.
- ------- ----------- --------
(b) Not applicable.................................
*(c)(1) Agreement and Plan of Merger dated as
of October 14, 1996 (incorporated by reference
to Exhibit (c)(1) to CSX's and Purchaser's
Tender Offer Statement on Schedule 14D-1 dated
October 16, 1996, as amended, relating to the
First Offer (the "First CSX
14D-1")).......................................
*(c)(2) First Amendment to Agreement and Plan
of Merger dated as of November 5, 1996
(incorporated by reference to Exhibit (c)(7) to
the First CSX
14D-1).........................................
*(c)(3) Conrail Stock Option Agreement dated as
of October 14, 1996 (incorporated by reference
to Exhibit (c)(2) to the First CSX
14D-1).....................................
*(c)(4) CSX Stock Option Agreement dated as of
October 14, 1996 (incorporated by reference to
Exhibit (c)(3) to the First CSX
14D-1).....................................
*(c)(5) Voting Trust Agreement dated as of
October 15, 1996 (incorporated by reference to
Exhibit (c)(4) to the First CSX
14D-1).....................................
*(c)(6) Employment Agreement of Mr. LeVan dated
as of October 14, 1996 (incorporated by
reference to Exhibit (c)(5) to the First
14D-9).....................................
*(c)(7) Change of Control Agreement of Mr.
LeVan dated as of October 14, 1996
(incorporated by reference to Exhibit (c)(6) to
the First
14D-9).....................................
*(c)(8) Answer and Defenses of Conrail, CSX and
the individual defendants to Second Amended
Complaint, and Counterclaim of Conrail and CSX
in Norfolk Southern et al. v. Conrail Inc. et
al., filed on December 5, 1996, in the United
States District Court for the Eastern District
of Pennsylvania (incorporated by reference to
Exhibit (c)(8) to the Solicitatio
Recommendation Statement on Schedule 14D-9 of
Conrail dated November 6, 1996, as amended,
relating to the Norfolk
Offer).......................................
Exhibit Description Page No.
- ------- ----------- --------
*(c)(9) Pages 4-5 and 9-14 of Conrail's Proxy Statement
dated April 3, 1996 (incorporated by reference
to Exhibit (c)(7) to the First
14D-9)..........................................
(c)(10) Second Amendment to Agreement and Plan of
Merger dated as of December 18, 1996
(incorporated by reference to Exhibit (c)(6) to
the
14D-1)..........................................
(c)(11) Form of Amended and Restated Voting Trust
Agreement (incorporated by reference to Exhibit
(c)(7) to the
14D-1)..........................................
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* Previously filed