Opinion ID: 423893
Heading Depth: 2
Heading Rank: 2

Heading: The CSX Tender Offer

Text: 30 Texas Gas is a public corporation whose primary business is running a natural gas pipeline system. American Commercial Barge Lines, a wholly-owned subsidiary of Texas Gas, is an ICC-regulated water carrier that operates a barge line east of the Mississippi. Its operations represent about 10% of Texas Gas revenues. 31 [230 U.S.App.D.C. 110] On June 6, 1983, Coastal Corp. made a hostile tender offer for 51% of Texas Gas' stock at $45 per share. Texas Gas looked for a white knight to make a friendly tender offer at a higher price and on June 9 found CSX Corp., which agreed to purchase 100% of Texas Gas' stock at $52 per share. CSX's primary business is operating a large railroad east of the Mississippi. The railroad is, of course, regulated by the ICC. 32 Texas Gas and CSX recognized that the merger of CSX with Texas Gas' barge line subsidiary required ICC approval under 49 U.S.C. § 11,343 (requiring ICC approval before one carrier can acquire another) and might require approval under id. § 11,321 (requiring ICC approval for a rail carrier to own a competing water carrier). They therefore agreed to place the barge line stock in an independent voting trust pursuant to ICC voting trust guidelines established under § 11,343. See 49 C.F.R. § 1013 (1982). 33 The voting trust was irrevocable and instructed the trustee, Midlantic National Bank, not to create any dependence or intercorporate relationship between CSX and American Commercial Barge Lines, nor to vote the trust stock to elect any ... representative of Texas Gas, CSX or their affiliates as an officer or director of the [barge line]. 4 CSX committed to apply to the ICC for authority to control American Commercial Barge Lines as soon as practicable. 5 CSX hoped that the voting trust would allow the overall CSX-Texas Gas merger to go forward while the ICC was considering whether to approve CSX's application to acquire the barge line subsidiary. 34 The ICC staff reviewed the voting trust agreement and requested various changes, including an instruction to the trustee to sell the barge line if the ICC disapproves the merger. 6 After CSX and Texas Gas made the changes, the ICC staff issued its informal nonbinding Commission opinion that the trust does effectively insulate ... CSX from violation of the Commission's policy against an unauthorized acquisition of control of a regulated carrier. 7 The ICC staff opinion did not discuss whether the voting trust also insulated CSX from having an unlawful interest in American Commercial Barge Lines under § 11,321.