Prof. Ian Giddy, New York University
The Acquisition of Consolidated Rail Corp. (A) (HBS Case 9-298-006)
In mid 1996, Pennsylvania-based Consolidated Rail Corp. (Conrail), the third largest railroad in the Eastern United States, was approached with a merger offer from Virginia-based CSX Corp., the largest railroad. This potential deal was part of an industry-wide trend toward consolidation and promised to change the competitive dynamics of the Eastern rail market. Investors were faced with the issue of whether to tender shares into the front-end of a two-tiered acquisition offer. To make this decision, one must value Conrail as an acquisition target and understand the structure of CSX's offer. This case study rovides an opportunity to value a large-scale acquisition using comparable transactions and discounted merger synergies. In addition, it illustrates the mechanics of a two-tiered offer and provides a glimpse of various anti-takeover provisions including poison pills, lock-up options, break-up fees, and no-talk clauses.