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1、The Acquisition of Consolidated Rail Corporation,CSX CEO TEAMCOO 陳佳汎 CIO 趙恬嘉 CFO 李禧宜 CSO 陳柏翰 CEO 蔡馥仰,Railroading Background(1),Explore from 1800s,Mid-1800,The first heyday,Around 1870s,Railroads began acquiring other railroads for lower cost,Railroads fail,Federal government intervened and establish
2、ed regulation,Railroading Background(2),1940s,Trucking emerged as a powerful competitor,19501960,Try to abandon unprofitable routes, M&A,1970s1980,19801995,Inflation,price fixed,Bankruptcy Congress passed the Staggers Rail Act,Recapture market share from the trucking industry,Another round of consol
3、idation began in the mid 1990s,Important acquisition,Burlington Northern & Santa Fe Pacific(1995) Synergy 560 million per yearBNSF 4.0billionUnion Pacific & Southern Pacific(1996) Synergy 660million per year in five years 5.4billion,Acquisition Target-Conrail,Controlled 29.4% of the Eastern rail fre
4、ight Connected the Major Northeastern cities & Midwestern hubs Near Monopoly control Northeast rail market The least efficient railroad in the East IPO in 1987,倂購Conrail產生的綜效(1),倂購Conrail產生的綜效(2),PV of Synergy (I),存續期間：保守估計，合併後Synergy存續10年 折現率選擇：Rwacc of CSX-Conrail = 7.5% Why choose it? Synergy is
5、from the merger. CSX possibly leverage buyout 40% of Conrail. CAPM：Rs = 8.24% 產業unlevered = 0.96 合併後，CSX-Conrail 的D/E = 33%Income tax rate = 35% levered of CSX-Conrail = 1.166Rf= 6.54% ; Rm= 8%,PV of Synergy (II),RB = 8.08% Assume rating is Baa.PV of Synergy = $1,917 million Source: (1) Cost reducti
6、on (2) Revenue increase Acquisition Shares = 90.5 million sharesPV of Synergy per share = $21.2Stock price (S0) = $71 每股合理價格 = $71 + $21.2 = $92.2,市場Valuation參考指標(I),市場Valuation參考指標(II),Conrail Financial Data Debt = $2,094 million Sales = 3,722 mn EBITDA = 1,017 mn EPS = $4.84 Book Value = $32.46 參考
7、EPS 及EBITDA multiple 計算結果在無競標者出現的情況下，CSX出價價格可介於每股$83.3 $96之間,CSXs Offer for Conrail Two-tiered Offer,Cash vs. Stock Offer (I),General Tax and Financial Effects Comparison,Cash vs. Stock Offer (II),Acquisition Cost Comparison：,Front-end Tender Offer,Efficiency and strategy concernsThe fair value stat
8、ute concernCut the front end offer into two stages The majority concernAt least 50.1% of Conrails shares,Supporting Parties,*CSX decided to acquire another 20.3% of acquisition shares rather than 14.6% for insurance.,Outcome of Conrails Acquisition,Pennsylvanias Business Corporation Law,Fair value s
9、tatute Voting rights statute Constituency statute,Important Provisions of the Merger Agreement,Break-up fee Lock-up options Poison pill No talk clause,Conclusion,Industry environment Synergy Strategy analysis Market valuation Conrail foundation and willing Provisions in acquisition progressManagement Team of CSX will do our best to complete the acquisition !,
