Up Abandons Bid For Santa Fe Decision Clears The Way For Santa Fe To Merge With Burlington Northern
Union Pacific Corp. scrapped its hostile attempt to buy Santa Fe Pacific Corp., clearing the way Tuesday for rival Burlington Northern Inc. to become the nation’s largest railroad.
Union Pacific ended the four-month bidding war days after two setbacks forced it to consider raising its offer from $18.50 a share, or $3.6 billion in cash. Burlington Northern offered a combination of cash and stock valued at $3.8 billion to $4 billion.
“Although a transaction at our current price would benefit Union Pacific shareholders, for us to overpay to acquire Santa Fe would not,” Union Pacific Chairman Drew Lewis said in letters to Burlington Northern Chairman Gerald Grinstein and Santa Fe Chairman Robert D. Krebs.
Union Pacific had argued that its bid, although lower than Burlington Northern’s, was a better value for Santa Fe shareholders because it would compensate them in cash immediately rather than forcing them to wait 18 months for ICC approval of the planned Santa Fe-Burlington Northern stock swap.
Grinstein, the apparent victor, was pleased by Union Pacific’s withdrawal from the contest.
“I think it’s a good day for BN, a good day for Santa Fe and a good day for the transportation system. It’s certainly a good day for shippers and employees of the two companies,” he said in a telephone interview.
Santa Fe said in a statement it would “vigorously pursue” its proposed merger with Burlington Northern, which is scheduled for a vote by shareholders of both companies next Tuesday.
Union Pacific, currently the nation’s highestrevenue railroad, was vying with No. 2 Burlington Northern for control of Santa Fe’s Chicago-to-Los Angeles line, the most direct rail connection between those cities. The winner would become the dominant western rail carrier.
Santa Fe agreed to be acquired by Burlington Northern in July, pending approval by shareholders and the Interstate Commerce Commission. Union Pacific made a competing bid in October.
Union Pacific’s stock rose $2.62 1/2 to close at $50.25 a share. Burlington Northern was down $1.87 1/2 to end at $47.50 a share. Santa Fe lost 62 1/2 cents to finish at $17.75.