Southern Pacific Co. (Sopac) and Seaboard Coast Line Industries, which operate major rail systems in the Southwest and Southeast, have opened talks on a possible "affiliation" that would create the nation's largest and first coast-to-coast railroad.
San Francisco-based Sopac revealed Thursday night that it already has acquired 700,000 shares of Seaboard stock, or nearly 5 per cent of that firm's outstanding shares. Seaboard's operations are based in Jacksonville and Richmond.
"Exploratory discussions of the possibility of affiliation of the two holding companies" have begun and any merger agreement would be subject to approval of directors and stockholders as well as the federal government, Sopac said.
A Seaboard-Southern Pacific combination would operate over nearly 30,000 miles of routes in half the nation's states, stretching across the Sunbelt from Richmond and Miami on the Eastern Seaboard to Los Angeles, San Francisco and the Pacific Northwest.
The two railroads now connect at New Orleans, Memphis and St. Louis and Seaboard's wholly-owned Louisville & Nashville also serves Chicago.
In addition, the two firms are engaged in a number of other industries - real estate development, interstate communications, newspaper publishing, trucking and pipelines - with overall annual revenues of some $3.5 billion.
Although the Interstate Commerce Commission must act on any merger proposal, the Justice Department's antitrust division also would study the combination for any potential anti-competitive impact on the economy.
The ICC, which held hearings on the general subject of rail mergers this week, recently issued a staff study that backed the type of merger Southern Pacific and Seaboard apparently are discussing - the end-to-end combination of lines that don't duplicate services.
Over the years, Southern Pacific and Seaboard have become two of the nation's richest transportation firms, through acquisitions and new ventures. Sopac has assets of nearly $4 billion, larger than any other airline, rail or trucking company; Seaboard's assets of $2.8 billion make it sixth largest in the rail industry.
Last year, Sopac earned profits of $110 million on revenues of $1.9 billion, while Seaboard earned $85 million on revenues of $1.6 billion.
Southern Pacific owns a 13.500-mile rail system, including commuter trains in the San Francisco area; three trucking companies that serve more than 26,000 miles of routes from Illinois and Louisiana to California and Oregon; a 2,500-mile pipeline system in six states; Southern Pacific Communications Co., an interstate microwave system that competes with American Telephone & Telegraph Co., and extensive forest, agriculture, minerals, grazing and commercial land projects.
Seaboard owns the Seaboard Coast Line (which resulted from a 1967 merger of the Seaboard and Atlantic Coast Line), Louisville & Nashville, Clinchfield, Georgia and West Point railroads, with a network of 16,000 miles. The firm's Florida Publishing Co. owns newspapers in Jacksonville, St. Augustine, Ormond Beach, Bunnell and Crescent City, Fla.