Csx Merger

In: Business and Management

Submitted By lucaplotti
Words 611
Pages 3
There are a few main reason that can explain why CSX have decided to implement a two-tiered offer:
- Avoid taxation at the corporate level, only the investor have to pay the taxation on the capital gains realized ones the transaction will be completed. In fact the first tier of the transaction is a tender offer, in which only the target’s shareholders are involved. The second tier of the transaction is a back-end merger, the acquirer plans to do a stock deal in order to avoid also in this tier of the transaction the taxation at the corporate level. The taxation exemption isn’t the main reason that can explain this offer, because with the same proportion of cash and stock employed also a negotiated merger will achieve the same result. Also this is a capital intensive sector and the taxation base is higher compared to other sector of the old economy, so the capital gain and the tax bill that will result, if the taxation exemption requirement are not respected, are not so huge;
- Avoid the Pennsylvania’s Business Corporation law. The premium that CSX are willing to pay in the two tier of the transaction isn’t the same, bigger with the tender offer, in order to take the control of the firm, and smaller in the back-end merger, this is not allowed unless the shareholder vote for the opt out of the statute before CSX would acquire more than the 19,9 % of Conrail. After the first stage of the transaction is completed CSX will own a 19,7 % stake of Conrail, and considering all the parties that support the merger ( management of Conrail and the employee trust ), CSX would control 35,50 % of the acquisition share and will need only another 14,60 % of the target shares to vote in favor of the opting out for it to pass. Ones the shareholders approved the opt out CSX could implement the second stage of the front end offer in order to acquire another 20,30 % stake of Conrail.…...

Similar Documents

Merger

...Mergers And Acquisitions: Shareholder Wealth Effects Mergers and acquisition otherwise identified as M& A defines an aspect of corporate management strategy, as well as corporate finance that deal with the selling, the buying and dividing of the various companies. It also involves combining the various companies and similarly oriented identities which could assist a given enterprise to grow rapidly within its sector of origin, or even a new field or location even without necessarily creating some subsidiary or joint type of a venture. The actual distinction which exists between a merger and an acquisition has been seen to become increasingly blurred in several aspects. This has been seen to be significant particularly in terms some ultimate economic outcome. Acquisition normally refers to the process of significantly smaller firms by a significantly large firm. However, it is notable that in some instances, a smaller firm could acquire some management control of a significantly larger firm or even a longer established firm in an effort to retain the real name of the latter for some past acquisition entity through combined efforts. This normally results into a reverse takeover and affects all the shareholders who are involved within the two firms. According to research study done by Ang and Kohers across the US territory, a reverse merger could also affect the shareholders in significant ways. This is because the merger enables a given private company to become......

Words: 1788 - Pages: 8

Merger

...Dating from October 1993 to July 1998. American Airlines did identify and correct the violations promptly. The merger of American Airlines and US Airways Group was expected to close in the third quarter of 2013; this would give bondholder of American Airlines Parent AMR 72% of the new company and US Airways Shareholders the remaining 28%. The Airlines would carry the American Airlines name and the headquarters will be consolidated at American’s current headquarter in Texas. This merger will create the world’s largest airline, and along with United and Delta would control three-quarters of the U.S. market. Sean Lane, bankruptcy judge disapproved the 20 million merger stating it as inappropriate. Antitrust lawyer Joseph Alioto brought suit against American representing 33 passengers and travel agents who all claim the merger would render the Airlines too large and would give fewer flights and poor quality service. American Airlines says the lawsuit is “baseless”. August 13, 2013 the United States Department of Justice and attorney general from six states along with the District of Columbia filed a suit to block the merger, the argument being that the merger would mean less competition and higher prices. Both American Airlines and US Airways say they will fight the lawsuit and move forward with the merger once they have the regulatory approval. If this merger moves forward, consumers lose the benefit of head-to-head competition between US Airways and American on......

Words: 9558 - Pages: 39

Conral Csx Case

...Conral CSX case Executive Summary Conrail has received two acquisition bids from CSX and Norfolk Southern. Introduction Conrail and CSX, the nation’s first and third largest railroads, have decided to participate in a merger of equals. CSX has offered to acquire Conrail in a two tiered deal. The first 40% of tendered Conrail shares will be bought at a price of $92.50 while the remaining 60% will be acquired through a stock swap at a ratio of 1.8561921 (CSX:Conrail). In the midst of this offer, a hostile Bid comes in from Norfolk Southern, a competitor in the Industry. Norfolk Southern offers ____ Analysis Case A, Question 1: Why is CSX interested in Conrail? How much should CSX pay for Conrail? The Stagger’s Rail Act of 1980 has created a deregulated environment in which acquisitions are used to improve the competitive positioning of existing companies within the railroad industry. CSX is interested in Conrail for a couple of reasons. Primarily, CSX would like to acquire Conrail because its routes are complementary to their own, allowing the combined company to provide “long-haul, contiguous, and therefore low-cost service between the Southern, Eastern, and Mid-Western parts of the United States.” Additionally, CSX’s acquisition of Conrail would prevent the company’s main competitor Norfolk Southern from gaining access to routes in the Northeastern United States. This would leave Norfolk Southern at a large strategic disadvantage. Lastly,......

Words: 1952 - Pages: 8

Mergers

...|Merger and Acquisition | INDEX |S.NO |Contents |Page No. | |1 |Abstract |3 | |2 |Introduction |4 | |3 |Types of Mergers |4 | |4 |Reasons for Mergers and Acquisition |5 | |5 |Advantages of Mergers and Acquisition |7 | |6 |Failure of Mergers and Acquisition |10 | |7 | Making it Happen |13 | |8 |Conclusion |14 | |9 |Bibliography |15 | Abstract: As a corporate strategy, Mergers and Acquisition have been used to expand size and growth of business. In this report this corporate strategy is......

Words: 3833 - Pages: 16

Csx Train Marketing

...Team Project CSX Railroad Team 24: Section 1: Company and Industry Background CSX is a rail based transportation company that carries the nation’s commodities like coal, agricultural products, merchandise, and other materials. Headquartered in Jacksonville, FL, CSX serves 23 states across the eastern United States and parts of Canada. The 21,000 mile rail network reaches more than 70 water ports throughout the region and operates nearly 4200 locomotives that carry roughly 190,000 freight cars and containers daily. CSX employees over 31,000 people and realized just over $12 billion in revenue in 2013. (Ward, 2012) The railroad industry in America is divided by the Mississippi river. Union Pacific and Burlington Northern & Santa Fe dominate the west with CXS and Norfolk Southern to the east. Union Pacific is the largest railway company in the country. It encompasses 23,000 miles of track in 23 western states. Union Pacific ended 2013 with almost $22 billion in revenue. Burlington Northern & Santa Fe is the second largest railway in the country and is owned by Berkshire Hathaway with $21 billion in revenue. CSX falls in at number three and Norfolk Southern makes the list at number four. Norfolk Southern is the only real rail competitor to CSX, sharing the eastern part of the country. Norfolk Southern’s annual revenue is similar to CSX at $11 billion with around 31,000 employees. (Henage, 2013) Starting in 1827, CSX’s history dates back to the......

Words: 4328 - Pages: 18

Merger

...Sandeep K Krishnan In an ideal merger, the newly created entity pools the best features of the two merging organizations. A well planned process built on the foundations of an open, honest and consistent communication strategy can pave the way. Mergers and acquisitions have become a common phenomenon in recent times. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merging entities give a great deal of importance to financial matters and the outcomes, HR issues are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR issues in mergers and acquisitions have been the major reason for these failures. The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the pre-merger phase and the post merger phase. Literature provides ample evidence of difference in between the human resource activities in the two stages: the pre-acquisition and post acquisition period. Due diligence is important in the first phase while integration issues take the front seat in the later. The pre acquisition period involves an assessment of the cultural and organizational differences, which will include the organizational cultures, role of leaders in the organization, life cycle of the organization, and the management styles. The mergers often prove to be......

Words: 3465 - Pages: 14

Csx Swot

...evaluation of trends and situation of a particular industry or market. An organization's competitive position, market and growth trends, operating and financial condition, and the general state of the company's internal and external affairs are evaluated in a situational analysis. * Is management planning to expand the business? * What strategy(ies) does management seem to be focusing on? * What is the human resource forecast? Is the company hiring or laying off? a) External Analysis: With a situational analysis, you evaluate external factors that may change the way your company operates. Often these changes relate to your competitors in the market, market and consumer trends, legal requirements, government regulations, mergers and acquisitions, social changes, the economic environment and your customer base. For example, you may evaluate your current and potential customers and look at customer preferences, purchase patterns and behaviors. In the SWOT analysis, you use the information from the external analysis to summarize your company's opportunities and threats. b) Internal Analysis: Organizations conduct an internal analysis as part of the situational analysis to essentially determine in what areas the company meets or exceeds expectations and in what areas it seems to be lacking. The entire organization is typically evaluated, from key staff and its organizational structure to brand awareness and company image. Other appropriate information......

Words: 670 - Pages: 3

Mergers

...with another company.   A merger is sometimes a voluntary and sometimes and involuntary transaction.   If a company has found itself in a place of financial difficulty or is simply exhausted all its resources to remain open, a merger may be the only way its employees can retain their position.   The alternative would be to close its doors and give up. Above we will discuss the differences between horizontal, vertical, and conglomerate mergers and how these differ from a joint venture. A merger is off and on again an intentional and some of the time and automatic exchange. On the off chance that an organization has ended up in a position of budgetary trouble or is basically depleted all its assets to stay open, a merger may be the main way its representatives can hold their position. The option would be to close its entryways and surrender. Above we will talk about the contrasts between flat, vertical, and aggregate mergers and how these vary from a joint wander. In conclusion, sometimes a merger is voluntary and sometimes unintentional transaction. If an organization has some financial issues within the company or is basically depleted all its assets to stay open, a merger may be the main way its representatives can hold their position. The option would be to close its entryways and surrender. Above we will talk about the contrasts between flat, vertical, and aggregate mergers and how these vary from a joint wander. Every time a merger is about to happened it is......

Words: 294 - Pages: 2

Merger and Acquisitions

...The Rise of Emerging Markets in Mergers and Acquisitions Developing countries are gaining strength and influence T he rise in the number of mergers over the past five years has been dramatic. Unlike previous merger waves, however, companies in emerging markets are playing an increasingly important role. Indeed, while the number of majority acquisitions increased globally by 6 percent, acquisitions of established companies by emerging firms grew at an annual rate of 26 percent. Although their motives differ from traditional M&A activity, it is clear that, in the near term, emerging competitors present a potential threat to companies in developed countries. Mergers and acquisitions have become a staple of newspaper headlines. Although most M&A activity is initiated by companies in the developed world, a recent A.T. Kearney study of global M&A reveals that a paradigm shift is occurring: Beginning in 2002, deals between developing and developed countries grew at an annual rate of 19 percent— far in excess of the industry average and four times faster than deals conducted within either developing or developed countries alone (see figure 1 on page 2). While not large in absolute terms, this rate of growth indicates how rapidly the developing world is catching up in the M&A business. In fact, the study found that companies from developing countries such as China, India, Malaysia, Russia, the United Arab Emirates and South Africa are snapping up......

Words: 3962 - Pages: 16

Merger

...Merging with another organization A merger occurs when two companies join forces to become one and make decisions together. A merger could present several advantages as well as disadvantages that Baderman Island Resort needs to consider before making any decisions. Baderman Island has two choices: it can merge with a similar business or merge with a different type of business. If merging with a similar organization such as a successful hotel chain, the merger could increase the company's growth and market power. A merger with another hotel chain could also give Baderman Island a stronger position in the hotel industry because it would have access to a larger clientele. A broader clientele would increase the company’s strength and growth. Such merger would also give the company a competitive advantage because it would increase market share. As a result, the company should increase sales, revenue, and efficiency. However, a merger would also have some disadvantages, which could present weaknesses. Baderman Island could lose its identity by merging with another hotel chain Baderman prides itself for providing a unique destination offering privacy and a pristine land. With the merger, the company could lose it focus and purpose, which is to offer a unique vacation. Becoming more popular could affect Baderman Island’s uniqueness. Baderman Island will need to measure the negatives and the positives. A merger could offer numerous opportunities. For example, the company......

Words: 402 - Pages: 2

Merger

...Excellence in Financial Management Course 7: Mergers & Acquisitions (Part 2) Prepared by: Matt H. Evans, CPA, CMA, CFM Part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and anti-takeover defenses. The purpose of this course is to give the user a solid understanding of how mergers and acquisitions work. This course deals with advanced concepts in valuation. Therefore, the user should have an understanding of cost of capital, forecasting, and value based management before taking this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www.exinfm.com/training Published June 2000 Chapter 4 Valuation Concepts & Standards As indicated in Part 1 of this Short Course, a major challenge within the merger and acquisition process is due diligence. One of the more critical elements within due diligence is valuation of the Target Company. We need to assign a value or more specifically a range of values to the Target Company so that we can guide the merger and acquisition process. We need answers to several questions: How much should we pay for the target company, how much is the target worth, how does this compare to the current market value of the target company, etc.? It should be noted......

Words: 11127 - Pages: 45

Mergers

...one additional question which is mandatory and not disclosed here. 1) . Differentiate between the following types of mergers and acquisitions: a. Subsidiary mergers b. Vertical acquisitions c. Horizontal mergers d. Conglomerate deals 2) What impact did the Sherman Antitrust Act of 1890 have on the first merger wave? Explain why this was the case. 3) Explain some of the unique characteristics of the fourth merger wave of the 1980s. In particular, discuss the incidence of hostile deals and the use of leverage during this period. 4) How do antitrust regulators use the Hirschman-Hirfindahl index? What other quantitative tools do they use when evaluating the competitive effects of mergers? 5) What are the main types of state antitakeover laws? Describe how each works. 6. Explain the merger approval process. What happens to shareholders who do not approve of the merger when the majority necessary for approval agree to the deal? Do these shareholders have any specific rights that are relevant to the deal? 7. Contrast the first and second merger waves. In what ways were they different and how were they similar? 8. What role did investment bankers, such as JP Morgan, play in the first merger wave? 9. What were some of the unique characteristics of the third merger wave? Explain how companies used the P/E game in the third merger wave. 10. Explain the main features of Sections 13D and 14D of the Williams Act. What are the requirements and......

Words: 276 - Pages: 2

Strategic Analysis of Csx

...CSX Corporation is one of the nation’s leading transportation suppliers. The company’s rail and intermodal businesses provide rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers. CSX Corporation is the parent company of several direct and indirect wholly-owned subsidiaries, including: CSX Intermodal Terminals, Inc.; CSX Real Property, Inc.; CSX Technology, Inc.; CSX Transportation, Inc.; Total Distribution Services, Inc. and TRANSFLO Corporation. CSX employs around 30,000 people, of which about 26,000 are union. These employees perform their duties in 23 states, the District of Columbia, and the Canadian provinces of Ontario and Quebec. CSX’s rail network infrastructure stretches westward to Chicago, southward to New Orleans, and northward to Syracuse. CSX’s rail operations can be grouped into four areas based on geography. The Coal Network connects coal mining operations in the Appalachian regions with industrial areas in the northeast and mid-Atlantic. The Interstate 90 corridor links Chicago and the Midwest to metropolitan areas in New York and New England. This route supports high speed intermodal, automotive and merchandise service. The Interstate 95 corridor connects Charleston, Jacksonville, Miami, and other southeastern cities to the major northeastern cities like Baltimore, Philadelphia, and New York. The Southeastern Corridor runs between western gateway cities like Chicago, St. Louis,......

Words: 11327 - Pages: 46

Csx Railroad

...Economic, Technological, Political, and Sociocultural Trends in strategic development CSX is one of seven class 1 railroads operating in the United States. The railroad industry doesn’t compete in a real free market. They tend to be somewhat monopolistic due to their size and scope, and for this reason they are regulated by the government. But as with any other business, the state of the economy is a factor on their profitability. With a continuingly slow economy the railroad services will remain lower in demand than CSX would like. As with mostly all of the other transportation services, the cost of fuel is a major contributing factor towards CSX’s bottom line. CSX and much of the railroad industry have implemented and continue to implement new technology to help keep their costs down, which allows them to be more competitive. According to the American Association of State Highway and Transportation Officials, freight moved on trains would cost shippers an additional $70 billion on standard trucks.  Fuel efficiency is not the only technological advancement being made in the railroad industry. As with many other businesses in the field of logistics, GPS and other wireless technologies continue to add efficiency. New technologies are being applied to increase safety. Over the last 5 years CSX has had a 40% improvement in the rate of train accidents. Being a regulated industry, railroad is at sometimes more than others, highly connected to the political environment...

Words: 458 - Pages: 2

Mergers

...Individual research objective Recently, there has been a lot of news about companies’ combination deals. Especially, in the telecommunication sector, mergers are the trend of the moment. M&A deals grab headlines, but what does this all mean to investors? This individual research tries to figure out the effects of mergers and acquisitions and what happens to the stock price when a company is bought out. Definition The terms of merger and acquisition mean slightly different things. Merger When two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated, mergers happen. Usually mergers occur in a friendly setting where executives from the respective companies participate in and try to ensure a successful combination of all parts. Mergers are often financed by an all stock deal (a stock swap). An all stock deal occurs when all of the owners of the outstanding stock of either company get the same amount (in value) of stock in the new combined company. Acquisition When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. Unlike mergers, acquisitions happen through a hostile takeover by purchasing the majority of outstanding shares of a company in the open market. Acquisitions can be carried out in a number of ways, including exchanging cash, stock, debt, or combinations thereof. In an acquisition, shares of the acquiring company......

Words: 1467 - Pages: 6