This is auction one of several over the next few months.
Press enter to begin your search Conrail Bidding 0 1. Conrail bidding does CSX want to buy Conrail? How much should CSX be willing to pay for it? Conrail is a significant player in the Eastern rail freight market controlling More importantly, it had near monopoly control over the lucrative Northeast rail market; its routes connected the major Northeastern cities with major Midwestern hubs.
Conrail proves to be an attractive target for CSX for a number of reasons. First and foremost, value could be created by consolidating overlapping operations and increasing revenue through service improvement.
At the moment, Conrail is the least efficient railroad in the East. It faced tough competition from trucking, which had a dominant share of the total Northeast freight market.
Need essay sample on Conrail Bidding? Since Conrail has near monopoly control over the lucrative Northeast rail Conrail bidding, the combined rail networks of CSX-Conrail would facilitate long-haul, contiguous, and therefore, low-cost service between the southern ports, the Northeast, and the Midwest.
Norfolk Southern, on the other hand, lacked access to the Northeast market, would be less able to service long-haul routes from either the South or Midwest. Secondly, in the shorter-haul routes between the Midwest and the South, CSX-Conrail would become more competitive through cost reduction.
According to the case, using current cost and revenue data combined with estimates of merger synergies and historical trends, the model projects operating ratios for a combined CSX-Conrail and for Norfolk Southern. If CSX-Conrail were to achieve its projected revenue gains and cost savings, it would become more efficient than Norfolk Southern.
Finally, note that as early as in s, Norfolk had indicated interest in acquiring Conrail. It was clear that if CSX does not act now, Norfolk is likely to acquire or cooperate with Conrail sooner or later. Note that Case A and Case B provide two different sets of projected gains in operating income under Exhibit 7 and Exhibit 6a respectively.
As such, we calculated two sets of synergies in the DCF valuation. Below is a table showing the valuation ranges we got from each of the valuation method: Something worth attention is that, under the intense bidding war, it was likely that either CSX or Norfolk would get Conrail.
If Norfolk wins the competition, CSX would suffer a loss in operating income almost for sure in the subsequent years Exhibit 6b Case B. How much is Conrail worth? The valuation ranges under each valuation method were presented in the table below: Norfolk was highly likely to suffer a loss if CSX wins Conrail.
To judge which firm should be willing to pay more, it is necessary to look at both the total gain in operating income in the case if the firm acquires the Related essay samples:Apr 16, · He is coordinating the railroad's efforts to carry out its plan.
It would buy the portion of the track that Conrail owns in the two states and would lease the rest, as Conrail now does. On the Record with Conrail President and COO - Railway Age Regional Railroad of the Year, CONRAIL, Small Railroad Huge Task Reshaping Conrail in Northern New Jersey.
The Norfolk Southern bid for Conrail is "a superior offer," said Doug Rockel, a transportation analyst at Furman Selz in New York, about Norfolk Southern's unsolicited bid.
Conrail G Corporate Restructuring Team 7 1) Why does CSX want to buy Conrail? 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.
Mar 07, · Railroad giants CSX Corp.
and Norfolk Southern Corp. ended a bitter bidding war Friday for Conrail Corp. by agreeing to split the railroad between them in a deal valued at $ billion in cash. Apr 16, · The Providence & Worcester Railroad Company is trying to prove it is the little engine that can provide profitable freight service in southern New England without governmental help.