Southern Pacific - AT&SF Merger

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This page last updated on February 1, 2014.

Timeline

May 1980
Southern Pacific announced at its mid-May stockholder's meeting, a proposed merger with Atchison Topeka and Santa Fe Railway.

December 23, 1983
Santa Fe Industries (parent company of AT&SF Railway) and Southern Pacific Company (parent company of Southern Pacific Transportation Co.) merged to form the Santa Fe Southern Pacific Corporation, with an effective date of December 31, 1983.

The Santa Fe Southern Pacific Corporation was formed on December 23, 1983, with the merger of the parent companies of the SP and AT&SF, but the railroads themselves were not joined at the time because of the need to follow Interstate Commerce Commission procedures. On March 23, 1984, the SFSP filed a merger application with the ICC to form a new railroad to be named the Southern Pacific & Santa Fe, headed by Lawrence Cena, currently president and CEO of the AT&SF. SFSP Chairman John J. Schmidt said that "No major line abandonments are anticipated in the application. The operating plan involves shifting of traffic over the most direct routes to expedite service, but there are no plans to cancel service to any community currently being served." The ICC has 31 months to act on the merger proposal. (Railfan & Railroad, July 1984, page 26)

March 23, 1984
Santa Fe Southern Pacific Corp. (the AT&SF parent company) applied to the ICC for approval to merge with and control of the Southern Pacific Transportation Co. The new railroad subsidiary would be called the Southern Pacific & Santa Fe Railway.

October 1, 1984
The ICC began hearings into the proposed AT&SF/SP merger.

July 24, 1986
The proposed SPSF merger was denied by the ICC. The SFSP Corp. parent company appealed the ICC decision on August 4, 1986.

January 5, 1987
Kansas City Southern Industries announced that they were willing to buy SP, in lieu of a completed merger of AT&SF and SP, pending the appeal before the ICC.

June 30, 1987
The SPSF merger appeal was denied by the ICC. The ICC gave the parent corporation 90 days to divest itself of one or both railroads.

September 4, 1987
SP's parent company, Santa Fe Southern Pacific Corp., announced that it would sell the entire Southern Pacific Transporation Co., to satisfy the ICC ruling that the parent comapny divest itself of one of the two railroads, either SP or AT&SF.

The following comes from the November 1987 issue of Trains, page 9:

Who wants SP? -- Santa Fe Southern Pacific had a September 28, 1987, deadline to submit to the ICC a 2-year divestiture plan for one of its two railroads, and made the expected official 24 days early by putting SP up for sale. SPSF may sell SP in entirety or piecemeal, or spin it off to SPSF stockholders. Three SP suitors were known: Kansas City Southern, SP employees (announced by the Railway Labor Executives' Association, whose 17 unions represent 25,000 SP employees), and SP management, which is looking at a possible leveraged buyout (wherein a group of investors acquires a firm mostly with debt that eventually is retired with revenue from the new company). KCS maintained it had financing lined up, hinted that if it bought SP it would sell the Overland Route line from Ogden, Utah, into California to Denver & Rio Grande Western. KCS parent KCS Industries, though, faced a possible corporate takeover bid by a group led by New York real estate investor Howard Kaskel, who said KCS's attempt to buy SP could harm its earnings. (In 1986, KCS's railroad earned $17.6 million on $487.7 million revenues, SP $14.1 million on $2.3 billion revenues.) There could be a bidding war for SP, and presumably sale would include its subsidiary Cotton Belt (SP's access to Memphis, St. Louis, and Kansas City). There were hints Santa Fe wanted to keep Cotton Belt, but it's doubtful the ICC would approve that. Historically, Santa Fe has wanted to reach St. Louis but has been thwarted. Stay tuned.

The following comes from the December 1987 issue of Trains, page 10:

D&RGW + SP? Denver & Rio Grande Western has entered the field of possible suitors for Southern Pacific, says it would keep SP intact with headquarters in San Francisco. Meanwhile, Santa Fe, fighting possible corporate raids on what would be a slimmed-down company after it sheds SP and some nonrail properties, announced a plan to buy back 38 per cent of its outstanding common stock, to be paid for from income from several sources, including the SP divestiture, a public offering of up to one-fifth of Santa Fe Energy stock, and transfer of real estate into a new investment trust. Other companies eyeing SFSP include the Henley Group of California, which acquired 5 per cent of SFSP, and Olympia & York of Toronto, which bought 6 per cent.

More Information

SP Corporate History -- General notes about Southern Pacific corporate history.

SP at UtahRails -- An index of SP information at UtahRails.

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