A coalition of railway unions and the management of Southern Pacific Transportation Corp. yesterday made parallel bids to acquire the railroad's stock for $750 million.
The offers by the railway unions and Southern Pacific's management were made separately but with the understanding that management and the unions would act together to acquire the Southern Pacific through an entity representing management, the employes and other investors.
The Railway Labor Executives' Associations said the total value of the offer was $3.6 billion, with assumption of the railway company's long-term debt and other liabilities and cost savings accounting for the balance. Southern Pacific management did not give financial details of its offer, but said it was similar to the unions'.
A spokesman for the Santa Fe Southern Pacific Corp. said the employe offer was not the only offer the company received yesterday for the railroad it once wanted to merge with the Atchison, Topeka and Santa Fe Railway.
Robert E. Gehrt said the company would not identify other bidders or provide details of their offers. However, Kansas City Southern Industries Inc. and Rio Grande Industries, the parent company of the Denver & Rio Grande Western Railroad, have said in the past that they planned to bid for the railroad.
The Santa Fe Southern Pacific Corp. was ordered to divest itself of the Southern Pacific last June, when the Interstate Commerce Commission refused to reconsider a rejection of the proposed merger of the two major Western railroads. The SFSP hopes to decide on a buyer in November. The company said when it filed its initial divestiture plan that it was interested in either selling the Southern Pacific in its entirety to a management/employe group, spinning off its major segments through sales to other railroads, or selling the company to its shareholders.
Selling the Southern Pacific in whole or parts to another railroad would require ICC review, which might draw out the process. A sale to either the employes or a management/employe group or to the shareholders would eliminate the need for a lengthy ICC proceeding.
Southern Pacific chairman and chief executive officer Denman K. McNear said the labor/management proposal offers potential for "the continuation of the Southern Pacific as an independent and vital element of the economy of the West and Southwest."
Drexel Burnham Lambert Inc. represents RLEA in putting together the financing for the offer. Brian M. Freeman, who helped negotiate a swap of labor concessions for stock at Eastern Airlines, is acting as financial adviser to the labor group.