Csx - Contrail Cast Study Solution

A two tiered deal was made by CSX because of the heavy regulation Pennsylvania has for mergers and to provide financial considerations for Conrail’s shareholders.

The rails are the single and greatest contributor to his vast fortune, and he saw it as one well deserved by his family and himself. The wealth should not be stripped from his good hands, as he saw it, especially considering his notable contributions to charity and the national economy all around. Vanderbilt expressed the utmost confidence in his own people and his own company. In fact, he stated in that same interview, “I don't take any stock in this silly nonsense about working for anybody but our own.” The idea of the federal government acquiring the railroads would not appeal to this attitude nor would it find support in any region of his company. This “support your own” type of attitude is one that carries well among those who are involved, thus the effort to acquiesce the railroads from Vanderbilt and his people would no doubt be faced with adversity.

railroad has allowed the rail industry to provide a more tailored service to its customers. It has also

6.2.2. Growth – the railroad industry is a mature industry and the growth is anticipated to come through acquisitions and no technological breakthrough is expected.

According to our calculations Cooper Copper has an optimum bargaining position because they can offer up to $60.13 (at a 4% growth estimated rate) for it’s the stock in order to acquire the majority its shares. Porter 's offer of $42.00 per share failed to get the majority of shares need to acquire control. VLN 's offered to honor the price of $53.10 for preferred shares. This is the share value that speculators and stockholders would hope to obtain although the actual offer could end up to be much less. According to our calculations and analysis the best possible offer Copper can offer up to $60.13 (at a 4% growth estimated rate) per share for Nicholson stock.

The grounds for any merger depend on the competitive nature of both firms. If one firm is highly competitive and tries to

(a) In a merger agreement, the assets and liabilities of the firm which is being acquired end up being absorbed by the buyers firm. A merger could be the most effective and efficient way to enter a new market without the need of creating

What are the major deal risks inherent in this merger transaction? How and to whom does the merger agreement allocate these key risks? (See, in particular, case exhibit 4.)

Some of the reasons why CSX wants to buy Conrail are, to increase the consolidation in the Railway industry. Further consolidation typically means lower cost for the consolidators fx because economies of scale and synergies and ….

b) the nature of takeover (it can be considered as “Insider Trading”, and to avoid litigation by shareholders, an acquirer may need to pay premium)

Q.2) Explain why it is necessary to identify who is the acquirer in a business combination?

In an industry beset by limited options to consolidate domestic rail traffic, CSX looked at Conrail as an avenue to increase market share and gain access to the North East rail network. With air travel, road travel and trucking taking an increasing share, significant revenue growth became difficult. As Conrail became profitable, Congress explored ways of privatizing it, giving CSX an opportunity to acquire Conrail. Though Conrail suffered from performance inefficiencies it had certain strengths relative to CSX and Norfolk with respect to highest revenue per mile of track operated, per carload originated etc. Conrail with operating revenue of $3,686

Mergers should exhibit the following five characteristics in order to be considered potentially viable candidates for a successful merger:

* AT&T should take advantage from slowing down in the merger activity and lower premiums. If negotiations take a long time, situation can reverse, driving the costs of acquisition up

Baosteel and Posco : Each company agreedto invest US125 million to acquire a stake in the other, with this stake being less than 0,5 %