To the best of my knowledge Conrail was not a failing railroad. Why was it devided up between CSX and NS?
John, First of all, welcome to TrainBoard, if you have not recieved such a welocme! In answer to your question, I am not an expert on the subject by any means.... my conjecture is that the time was right for the government to attempt to spin it off for maximum value, which they probably got. Any other theories? Harold
Conrail was very profitable. CEO D Levan talked to CEO Snow of the CSXT about possible merger, however Goode of the NSgot wind of it & was afraid if the CSXT/CR merger went thru, the NS would then be second banana in the east, thus he then attempted to purchase the majority of outstanding CR stock with the intention of the NS taking over CR. Well then the CSXT started bidding on CR and the two railroads (NS & CSXT) started bidding against each other with the intention of buying CR for themselves. Well the stock went up to around $118 a share (way more than it was really worth) when Goode & Snow decided to jointly buy CR and divide it up. They suckered the STB into believing there would be minimum job cuts and the STB approved their takeover NS got 56% and CSXT 44%. Levan from CR got a ton of money to leave as did most all CR higher officials, the rest of us were left to wonder if we would even have a job!
Fred, you're almost correct, NS got 58% and CSXT got 42%. Chessie, the Government sold ConRail a long time before NS and CSX started their bidding war for it. The Government sold ConRail in 1986 or 1985 (The 80's) and ConRail became a For-Profit corporation with stock being held by the public. NS actually tried in the 1980s to buy ConRail from the Government. They tried again in 1994, 1995, and early 1996 I think. NS always wanted ConRail so that's why when CSX stepped in NS started fighting for it. CSX basically tried to get something NS had always wanted. CSX and NS gave the public a very good price for their (ConRail) stock and that's when the public shareholders sold ConRail out in 1997/1998.
