From: utzoo!decvax!ucbvax!ARPAVAX:C70:railroad Newsgroups: fa.railroad Title: Mop Up Article-I.D.: ucb.1948 Posted: Tue Sep 14 17:35:01 1982 Received: Wed Sep 22 07:37:35 1982 >From Weinstock@CMU-20C Tue Sep 14 17:34:48 1982 URGENT By H. JOSEF HEBERT Associapted Press Writer WASHINGTON (AP) - The government approved the merger today of three Western railroads, clearing the way for creation of a single rail system stretching from the Pacific coast to Chicago and the Gulf of Mexico. The merger of the Union Pacific, Missouri Pacific and Western Pacific railroads will create a system covering 21 states and establish the nation's third largest railroad in track miles. The Interstate Commerce Commission, which has been considering the merger for two years, said it was approving the proposal with the stipulation that the new railroad provide trackage rights to competing lines in a number of areas. ICC Chairman Reese Taylor said the trackage rights were granted in certain marketing areas because otherwise ''significant competitive problems'' would have arisen. The new railroad, Taylor told reporters, will ''enhance efficiency and competition . . . while providing improved service to shippers.'' The railroad industry and executives from the three railroads had anticipated approval for the merger, which analysts say will create an especially profitable rail line in the western two-thirds of the country. With the merger, a single line will be able to ship coal and grain not only to the Gulf coast but also to three port areas stretching the length of the Pacific coast. The ICC, 7th graf ap-ny-09-13 1412EDT BC-RAILROADS (BizDay) By AGIS SALPUKAS c. 1982 N.Y. Times News Service NEW YORK - The Interstate Commerce Commission's endorsement of the acquisition by the Union Pacific of the Missouri Pacific and the Western Pacific is likely to increase the pressure for more railroad combinations, according to Wall Street analysts and industry executives. This could leave the nation with about six or seven large systems by the end of the decade, most experts predicted, compared with the present 15 major railraods. These new systems could, in turn, become the cores of transportation combinations that would also move freight by trucks and possibly ships. The new combination ''will probably trigger more merger activity,'' said Lawrence Cena, president of the Atchison, Topeka & Santa Fe Railway Co. His own railroad, for example, will face competitive pressure from the new combination. Cena added, however, that the combinations would not come quickly. ''This is a period where you will be cautious,'' he said. ''There are not that many dancing partners left out there. There is also a lot of uncertainty.'' Andras R. Petery, the railroad analyst for Morgan Stanley & Co., said that Monday's decision would definitely increase the pressure on other Western railroads to seek partners. The other major railroads in the West are the Santa Fe and the Southern Pacific, which have already explored merger possiblities but now have no active talks. Petery, along with other Wall Street analysts, also believes that, with the partial deregulation of the railroads through legislation in 1980, the larger railroads have a major competitive advantage. The legislation, which allows rapid adjustments of rates, enables the larger roads to lower costs to shippers directly, while the smaller railroads - which must ship on other roads to reach distant destinations - have to negotiate with the other railroads on such adjustments. With the deregulation of so-called piggyback traffic, where truck trailers are moved on rail cars, the ability to control freight over long distances has become important and the larger railroads have been capturing a larger market share. Some analysts believe that the larger railroads have the potential to become companies that would acquire truck and barge capabilities and possibly link up with steamship companies, increasing their ability to control the movement of freight from customer to customer. ''The future is for freight to move increasingly under a single system owned by one company by rail, truck and barge,'' Petery said. In the past, mergers have forced competing railroads to seek partners, and they have also allowed railroads to cut duplicate staffs and operations. The merger of the Southern and the Norfolk & Western in March, for example, could save about $88 million a year, the combined company estimates. CSX, the product of the 1980 merger of the Chessie System and Seaboard Industries, has reported savings of $58 million through consolidations of staffs and facilities, better routing and higher traffic in 1981 alone. J. Kenneth Greenburg, an analyst at Oppenheimer & Co., said that Monday's ICC decision was expected to put particular pressure on smaller independent railroads such as the Chicago & North Western, the Kansas City Southern and the Illinois Central Gulf. ''I wouldn't want to be the last independent railroad in the United States because by then everyone will have their mosaic put together and they would just go around you; you would be isolated,'' he added. Richard H. Fischer, the railroad analyst for Merrill Lynch, Pierce, Fenner & Smith Inc., said that, even though the ICC protected some trackage rights for such smaller railroads as the Missouri-Kansas-Texas; the St. Louis Southwestern, a subsidiary of the Southern Pacific, and the Denver & Rio Grande Western, he expects the merger to ''put competitive pressure on various systems to look for a merger partner.'' From the viewpoint of Cena, the Santa Fe's president, however, mergers may not always bring the expected advantages. ''Traffic gravitates to the easiest, most economical, pattern,'' he said, ''not because you glued some system together; that's not where the traffic wants to go.'' nyt-09-14-82 1155edt -------