Case Analysis

The Acquisition of Consolidated Rail Corporation 1. Why does CSX pauperization to procure Conrail? How much should CSX be ordaining to digest for it? The entire eastward rail freight market was learnled by CSX, Norfolk and Conrail. Acquisition of Conrail would plication the combined entity the major player in the market with well-nigh 70 % market partake. The main reasons for CSX to buy Conrail were * Conrail had near monopoly curb all over the Northeast rail market which was considered to be iodin of industrys most prized possessions * Its routes complemented that of Conrails and they will be able to provide low cost operations to North-eastern South-eastern and western states. * It will give a competitive edge over Norfolk as they lacked access to the Northeast market. * Both CSX and Conrail were non direct(a) at the same efficiency as Norfolk. The merger will shit synergies which will make the combined entity more expeditious tha n Norfolk. The operating ratio of Conrail was around 80% and that of CSX was 77 %. Norfolk had a kick downstairs ratio of 73.5% * There was also a worry that if CSX does not germinate Conrail, Norfolk will go ahead and acquire it since Conrail was seen as a prized possession of the industry * The merger was estimated to generate an elongate $370 million in annual operating income 2.

Analyze the CSXs structure for Conrail: a. Why did CSX make a two tiered offer? What effect does this structure have on the manage? b. What are the economic rationales for and the takeover implications of the various provisions in the merger obligation? (I.e. no talk clause! , lock up options, break up fee and poison pill shareholder right plan) a) CSX had structured a two tiered pull in over of worth $8.3 billion at announcement. Under this agreement CSX would corrupt 90.5 million Conrail shares outstanding in the event of the science. CSX would pay $92.50 per share in cash for the first 40% of Conrails acquisition (front end offer) and...If you want to get a safe essay, rewrite it on our website: BestEssayCheap.com

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