ACQUISITION OF CONRAIL(B) ASSIGNMENT
Mergers, Acquisitions and Corporate Restructuring
Submitted To
Professor Vishwanath SR
Submitted By
Amit Prasad
Swathi Nivarthi
1. Why did Norfolk Southern make a hostile bid for Conrail?
Ans: The most prominent reason for Norfolk to make a hostile bid was to continue its existence. Either of the companies on merging with conrail would become the single largest railroad provider with over 70% market share. Such a single large entity would prevent the very existence of any other railroad provider as they would be unable to match the economies of scale and would go bankrupt. Thus Norfolk was forced to make a hostile bid to save its very existence in the market.
In addition, there are several other …show more content…
As per details in the case, we can see that CSX and Norfolk have almost agreed to offer $115 per share to the Conrail shareholders, however, from the calculations above, it is apparent that Norfolk has a better synergy compared to CSX and would lead to a higher growth in the future, the higher share price offered by CSX could lead to negative consequences at a later date.
CSX is offering a majority of payment as stocks. The stocks of CSX have already declined by more than 13% in the near past and as such, even the newly issued shares would continue to bear that market risk. On the contrary, Norfolk is giving the payment as all cash which does not bear the market risks and is a better bet in the short term
Nullifying the antitakeover statute would not only expose the shareholders to discriminatory prices in the future but would also make it a target of hostile takeover in case the merger with CSX fails due to some reason. As such, I would not vote to opt out of the act.
Reactions of Capital …show more content…
The law limits on what firms can do to grow their business. This is a disadvantage because the law restricts companies’ operations. Firms cannot just merge as desired without following the provisions
Benefits Associated:
The antitakeover law prevents hostile takeovers and ensures the survival of companies and prevents them from falling prey to the larger corporations.
In this particular case Pennsylvania's tough anti-takeover law provided Conrail the power to keep Norfolk away from the hostile takeover. Conrail's board invoked this provision to justify its disregard for Norfolk's higher-valued bid that benefited the short term interest of shareholders.
The antitakeover provisions like, the fair price provisions are intended to protect shareholders and insure that they would be able to maximize their share value.
The next provision of the law related to the voting rights makes sure that the shareholders have a say in the company’s decisions and are not just ignored blindly due to a major shareholding
Mergers, Acquisitions and Corporate Restructuring
Submitted To
Professor Vishwanath SR
Submitted By
Amit Prasad
Swathi Nivarthi
1. Why did Norfolk Southern make a hostile bid for Conrail?
Ans: The most prominent reason for Norfolk to make a hostile bid was to continue its existence. Either of the companies on merging with conrail would become the single largest railroad provider with over 70% market share. Such a single large entity would prevent the very existence of any other railroad provider as they would be unable to match the economies of scale and would go bankrupt. Thus Norfolk was forced to make a hostile bid to save its very existence in the market.
In addition, there are several other …show more content…
As per details in the case, we can see that CSX and Norfolk have almost agreed to offer $115 per share to the Conrail shareholders, however, from the calculations above, it is apparent that Norfolk has a better synergy compared to CSX and would lead to a higher growth in the future, the higher share price offered by CSX could lead to negative consequences at a later date.
CSX is offering a majority of payment as stocks. The stocks of CSX have already declined by more than 13% in the near past and as such, even the newly issued shares would continue to bear that market risk. On the contrary, Norfolk is giving the payment as all cash which does not bear the market risks and is a better bet in the short term
Nullifying the antitakeover statute would not only expose the shareholders to discriminatory prices in the future but would also make it a target of hostile takeover in case the merger with CSX fails due to some reason. As such, I would not vote to opt out of the act.
Reactions of Capital …show more content…
The law limits on what firms can do to grow their business. This is a disadvantage because the law restricts companies’ operations. Firms cannot just merge as desired without following the provisions
Benefits Associated:
The antitakeover law prevents hostile takeovers and ensures the survival of companies and prevents them from falling prey to the larger corporations.
In this particular case Pennsylvania's tough anti-takeover law provided Conrail the power to keep Norfolk away from the hostile takeover. Conrail's board invoked this provision to justify its disregard for Norfolk's higher-valued bid that benefited the short term interest of shareholders.
The antitakeover provisions like, the fair price provisions are intended to protect shareholders and insure that they would be able to maximize their share value.
The next provision of the law related to the voting rights makes sure that the shareholders have a say in the company’s decisions and are not just ignored blindly due to a major shareholding