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    CSX wants to acquire Conrail to expand its rail network on the East Coast. CSX structured its two-tiered tender offer for Conrail to gain control of the company while limiting costs if not enough shares were tendered. As a Conrail shareholder, whether to tender shares to CSX depends on one's valuation of Conrail and expectations of how the bidding war may progress.

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    CSX wants to acquire Conrail to expand its rail network on the East Coast. CSX structured its two-tiered tender offer for Conrail to gain control of the company while limiting costs if not enough shares were tendered. As a Conrail shareholder, whether to tender shares to CSX depends on one's valuation of Conrail and expectations of how the bidding war may progress.

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    189 views1 page

    Exam q-M&A

    Uploaded by

    ojha_rajesh
    CSX wants to acquire Conrail to expand its rail network on the East Coast. CSX structured its two-tiered tender offer for Conrail to gain control of the company while limiting costs if not enough shares were tendered. As a Conrail shareholder, whether to tender shares to CSX depends on one's valuation of Conrail and expectations of how the bidding war may progress.

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    1. Why does CSX want to buy Conrail? How much should CSX be willing to pay for it? 2.

    Analyze the structure of CSXs offer for Conrail. a. Why did CSX make a two-tiered offer? What effect does this structure have on the transaction. b. What are the economic rationales for and the takeover implications of the various provisions in the merger agreement (i.e. no-talk clause, lock-up options, break-up fee, an poison pill shareholder rights plan)? 3. As a Conrail shareholder, would you tender your shares to CSX at $92.50 in the firststage offer? 4. Why did Norfolk Southern make a hostile bid for Conrail? 5. How much is Conrail worth? In a bidding war, who should be willing to pay more, Norfolk Southern or CSX? 6. Why does CSX refer to Norfolk Southerns bid as a non-bid? What should Norfolk Southern do as of mid-January 1997? 7. As a shareholder, would you vote to opt-out of the Pennsylvania antitakeover statute? What do the capital markets expect will happen?

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