Prospect Bids $434 Million for Illinois Central
Prospect Group, a New York investment group with rail interests, Friday announced a $434-million bid for Illinois Central Transportation Co., sparking speculation that other suitors would enter the picture.
The announcement put the spotlight on what role another IC shareholder that uses its rail lines, Archer-Daniels-Midland Co., would play. Analysts said it was possible another railroad company would step up and announce its interest in IC now that Prospect has opened the bidding.
Prospect said it did not plan to merge the IC railroad with its MidSouth Corp., a Mississippi railroad bought from IC several years ago, and instead planned to operate it as a separate company.
The bid was good news for IC shareholders. The price of the stock shot up $7.875 on the New York Stock Exchange to close at $22.375 on news of the $20-a-share bid.
Prospect already owns 4.7% of Illinois Central, which after several years of restructuring that included selling less profitable short-distance rail lines, was spun off Jan. 1 from Whitman Corp., now mainly a consumer products company. Whitman, previously called IC Industries, owns Midas International, the muffler company, and Pet Inc., the specialty-foods company.
Susan Chapman of Dillon, Read & Co. said some analysts speculate that Consolidated Rail Corp. might seek IC because it told analysts this week it was considering buying railroads. Philadelphia-based Conrail declined comment.
Prospect, led by Wallace McDowell Jr., bought its MidSouth rail trackage from Illinois Central several years ago.