Evening star., 1962-01-13
Merger Of Pennsy and N. Y. Central
Expected to Arouse Sharp Debate
RAILROADS
Continued From Page Al


finally as saying where they
want to be-"
Felix S. Hales, Nickel Plate
Road president, said the
merger plan was probably a
good idea adding that it in
dicates that there will be three
major systems in the East
based on Norfolk & Western
and Nickel Plate, C&O and
BIO, and the Central and
Pennsylvania.
Stuart 7 Saunders, president
of Norfolk and Western. called
the merger a highly conStruc-
tive development" and said it
would contribute greatly to
the solution of many problems
confronting Eastern railroads"
He expressed the hope yester-
days action would expedite
1.-The disposition of our pending
consolidation proceedings by
the Interstate Commerce Com
mission
The Justice Department last
fall strongly criticized a pend
ing merger plan of the Seaboard
Air Line and Atlantic Coast
Line Railroads, one of about
a dozen now under review by
the ICC.
The Pennsylvania and the
Central said they hoped to file
a formal application to join
in a new Pennsylvania New
York Central Transportation
Co. within 80 days.
Stockholders of the two roads
will be asked for their approval
at annual meetings scheduled
for next May.
Future Mergers Possible
The decision binding the Gen.
tral to a future with the Penn
sylvania was expected to i'm
prove chances for two other
Eastern railroad mergers which
the Central heretofore has
fought, fearing isolation.
One of these would unite the
Chesapeake & Ohio and the
Baltimore & Ohio Railroads.
In the other, the Norfolk &
Western Railway seeks to COM
bine with the Nickle Plate
and Wabash Railroads.
1t was assumed the Central
now will withdraw opposition.
Railroad analysis have pre-
dicted that in a probable even
tual realignment of Eastern
carriers into three merged sys-
TENS, the Pennsylvania will be
required to sell off it's 1873 per
cent stockholding in the N&W. |
Such a development may
have been foreshadoWed with
the resignation yesterday by
Mr. Saunders, N&W president,
as a Pensy director. The va
cancy left by Mr.. Saunders was
filled with election of Howard
Butcher III, Philadelphia in
vestment banker, to the PennSy
board.
Financial specialists have
estimated that elimination of
duplicating track, yards, ter
minalS and other facilities cou-
pied with operating economies
might in time yield savings of
from $100 million to $3.50 mil
lion a year in Pennsy-Central
consolidation.
However, the boards said yes
terday an exact amount has
not been determined.
SIT Billion in Revenues
Between them, the huge rail-
roads, the Nations biggest in
assets, have annual revenues of
roughly SIT billion, about 4,8O0
locomotives, 255,OOO freight and
passenger cars, nearly So bill
lion in debts and 10000 stock
e1.olders.
Under proposed terms, Gen.
tral stockholders would ex-
change each common share for
1.3 shares in the new corpora
ton, Pennsy stockholders on a
one-for-one basis.
Just before merger terms
were announced, Central COM
mon closed on the New York
Stock Exchange at $2O.87, up
81 cents for the Day, Pennsy
common at $18.12, up IL cents.
Central and Pennsylvania
stock each gained 3s on the
Pacific Coast Stock Exchange
after the merger agreement was
announced.
Both New York Central and
Pennsylvania. along with other
railroad stocks, have gained in
market value in recent months
as rail earnings rallied from
dismal lows but still wound !.
up industryWide at the lowest
level since 1916.
Also experiencing bad year.
the country'S II trunk airlines
finished with a combined deficit
estimated at $50 million.