Santa Fe Rebuffs $3.6-Billion Union Pacific Bid

Santa Fe Pacific Corp.’s board of directors rebuffed a $3.6-billion takeover offer from Union Pacific Corp., leaving investors to choose between that bid and one by Burlington Northern Inc.

Santa Fe Chairman and Chief Executive Robert Krebs said in a letter to Union Pacific that the railroad holding company’s latest bid still failed to match Burlington Northern’s friendly offer of $3.8 billion, or $20.40 a share, in cash and stock.

Bethlehem, Pa.-based Union Pacific said last week that a Santa Fe rejection of the all-cash offer of $18.50 would force the railroad holding company to pursue a hostile takeover. Many analysts and some investors had said Union Pacific’s offer was superior because it allows investors to receive cash immediately for all of their shares without having to wait for federal regulatory approval.

What’s more, they said, Union Pacific’s far deeper pockets mean it can surpass any bid by Ft. Worth-based Burlington.

The stakes are high in the battle for the parent company of the Atchison, Topeka and Santa Fe Railway Co. The winner will become the dominant carrier not only in the West but also in intermodal shipping, the fastest-growing segment of the industry. Intermodal systems use a combination of rails and trucks to carry goods, and Santa Fe has one of the industry’s most extensive networks.