Union Pacific Proposes Trust for Santa Fe

Union Pacific stepped up its hostile bid for Santa Fe Pacific late Tuesday by offering to buy Santa Fe for $3.27 billion and then place the railroad in a voting trust until the merger is approved by regulators.

Santa Fe investors had urged Union Pacific to propose the trust, because it would enable them to get their money upfront while leaving Union Pacific to bear the risk that the merger would later be blocked by the Interstate Commerce Commission.

Union Pacific lowered its price for that risk, however. It proposed a cash tender offer of $17.50 a share for 57% of Santa Fe’s stock, followed by an exchange of stock also valued at $17.50 a share.

Union Pacific had previously offered $20 a share in stock without a voting trust, and that remains an option for Santa Fe to consider.

Santa Fe, whose shares closed Tuesday at $14.875, has so far spurned UP in favor of being acquired by another big railroad, Burlington Northern.