One of the biggest business stories of last week-a fight over control of a major railroad-conjured up memories of long-forgotten lessons from 19th Century history. The unfolding corporate drama, unfortunately, isn’t peopled with such colorful characters and robber barons as Cornelius Vanderbilt, Jim Fisk or Daniel Drew.
There is a Drew involved, however. Drew Lewis, chairman and chief executive of Union Pacfic Corp., sprang an unpleasant surprise on the two other big Western railroads. Union Pacific topped a $2.52 billion agreement reached in June for Burlington Northern Inc. to purchase Santa Fe Pacific Corp.
Schaumburg-based Santa Fe immediately rejected the $3.4 billion hostile bid and vowed to stick to its agreement with Burlington Northern. Union Pacific responded by filing suit in Delaware Chancery Court seeking to cancel the previous merger agreement and force Santa Fe to negotiate.
Most analysts believe a Union Pacific-Santa Fe combination would never be approved by the Interstate Commerce Commission because of antitrust implications resulting from duplication of track and elimination of competition. Burlington Northern and Santa Fe are a better fit, they said, because for the most part they don’t serve the same geographic areas.
Some said Lewis’ real purpose in making the offer was to force rival Burlington to pay more for Santa Fe and increase its dilution of earnings.
