CASE HARVARD: the acquisition of consolidated rail corporation (40)

Case A

Question 1: Why is CSX interested in Conrail? How much should CSX pay for Conrail? 

Question 2a: Analyse the structure of the CSX-Conrail deal. Why did CSX make a two tiered offer? What effect does this structure have on the transaction?

Question 2b: What are the economics rationales and takeover implications of the various provisions in the merger agreement (no talk clause, lockup options, breakup fee, and poison pill?)

Question 3: As a Conrail Shareholder would you tender your shares to CSX at a price of 92.50 in the first offer?

Case B

Question 1: Why did Norfolk Southern make a hostile bid for Conrail?

Question 2: How much is Conrail worth? In a bidding war who would be willing to pay more Norfolk Southern or CSX? 

Question 3: Why does CSX refer to Norfolk’s bid as a non-bid? What should Norfolk Southern do as of Mid-January 1997?

Question 4: As a shareholder would you vote to opt-out of the Pennsylvania antitakeover statute? What do the capital markets expect to happen?

Question 5: What are the costs and benefits of regulating the market for corporate control for statutes such as Pennsylvania’s anti-takeover law?

Other question

Question 1: Why is CSX interested in acquiring Consolidated Rail Corporation (Conrail)? Describe the arguments for the offer being motivated by synergies, as well as arguments for the motivation to pre-empt a bid by Norfolk.

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