Norfolk Southern, CSX File Conrail Plan

Railroad giants CSX Corp. and Norfolk Southern Corp. on Monday filed a long-awaited plan for their proposed $10.2-billion purchase of Conrail Inc. and said they would spend $1.2 billion to improve service.

The two railroads, in the filing with federal regulators, said they would cut about 3%, or 2,190, of the existing 73,000 jobs at the three railroads over three years.

Norfolk Southern and CSX earlier this month completed their purchase of all Conrail stock after agreeing in April to a joint acquisition. That deal marked the end of a six-month battle in which the two companies were bidding against each other for control of the East Coast railroad.

The proposed transaction calls for Norfolk, Va.-based Norfolk Southern to pay $5.9 billion for 58% of Conrail and CSX to pay $4.3 billion for the rest.

In commenting on the filing, executives of both companies appealed to previous concerns that an acquisition by one of the railroads would create antitrust problems.

“This transaction is by far the most pro-competitive railroad restructuring in history. It will create two new Northeast/ Southeast rail systems that will do their utmost to best each other in the marketplace every day,” Norfolk Southern Chief Executive David Goode said.

Originally scheduled to be submitted last week, the filing with the Surface Transportation Board was delayed because of logistical problems associated with the eight-volume, 15,000-page document.

The federal board, which oversees railroads, is expected to take nearly a year to review and rule on the application.

Norfolk Southern stock rose $2 to close at $103; CSX shares declined 12.5 cents to close at $54.125, both on the NYSE.

Richmond, Va.-based CSX said it would spend more than $488 million for projects related to the acquisition.

CSX also said it expects $264 million in cost savings and $146 million in net revenue gains from the transaction for a total of $410 million, compared with previous estimates of $240 million.