CSX and Conrail Agree to Merge
[From a CSXT letter to its employees dated October 15, 1996] . . . . I am pleased to inform you today that CSX Corporation and Conrail Inc. have agreed to a strategic merger valued at approximately $8.4 billion. Together, we will become one of the largest transportation and logistics companies in the world, offering customers expanded rail service and container shipping, barge, intermodal and contract logistics services. Together, we will offer much more extensive single-line rail service opportunities to shippers and receivers in 22 states over our 29,645 mile system stretching from Chicago, Boston and New York to Miami and New Orleans. We will also serve the general public as well. The new company we are creating will be more competitive with trucks and other modes of transportation, providing a greatly improved alternative to truck movements over heavily congested north-south and east-west corridors. This transaction also offers an opportunity to improve passenger safety and service and to begin to address the need to separate freight and passenger service in high density commuter and Amtrak corridors, including Philadelphia, Baltimore, and Washington, D.C. Finally, the merger allows us to build on Conrail's strength in coal transportation, CSX's experience in merchandise traffic, and the strong intermodal and logistics operations of both companies. Importantly, our companies share an uncompromising commitment to safety, operating excellence and superior service, and have compatible cultures.
While the process of combining our two companies will take some time and there is much that has not yet been determined, I know that you will have many questions about how this will affect you. We believe there will be some jobs lost at both companies as a result of consolidations. However, we believe that these losses will be substantially offset by new jobs that will result from the significant business growth that we expect will result from the merger. A press release announcing the merger was issued this morning which should answer many of your questions. Additional information will be provided to you later today. We will file an application seeking Surface Transportation Board approval of the merger early in 1997, and we expect to complete the transaction in late 1997. In the meantime, the most important thing you can do is to keep focused on your work as we prepare for an exciting future. We are committed to keeping you informed of important developments as they occur.
I know you will be as enthusiastic about this merger as I am. This is a tremendous opportunity before us. You should be especially proud of all that you have done to bring us to this point, to make this a strong company today, and - in the near future - part of our nation's finest rail/transportation system. I thank you for your continued hard work and support. /s/ A.R. "Pete" Carpenter
Norfolk Southern Makes Tender Offer for Conrail
[From a CSXT letter to its employees dated October 25, 1996] . . . . The CSX-Conrail merger remains on track. Nothing has changed the strength of the current agreement between our two companies and the benefits that would accrue to our shareholders, our customers and employees. Despite the unsolicited tender offer for Conrail from Norfolk Southern, we are fully confident that we will prevail and consummate the proposed CSX-Conrail merger.
As noted in our response, Norfolk Southern's hostile offer simply does not provide the same long-term value as the strategic CSX-Conrail partnership. The fact is that the merger of CSX and Conrail will result in service, efficiency and competitive benefits that cannot be achieved by an adversarial attempt to link the Norfolk Southern and Conrail systems. By every measure, the CSX-Conrail merger is superior in economic, operational and public policy terms.
Norfolk Southern is a respected railroad and competitor. Where our managers and employees deal with Norfolk Southern to interchange traffic, conduct intercarrier billing or otherwise provide safe, reliable service to customers, we should continue to cooperate fully and maintain business as usual.
Winning endorsement and approval of the CSX-Conrail merger is in the hands of a very capable team. You can support that team by continuing to "Be the Best" and focusing on our 1996 goals in safety, reliability and customer service. Doing that, we can reach our financial objectives and keep our company strong. /s/ A.R. "Pete" Carpenter