Why Is Conrail Being Described As A Scarce Jewel?

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1. Why is Conrail being termed as a “scarce jewel”? (4mks)
Conrail was regarded as the railroad industries diamond in rough since it was the only Class 1 railroad that operated in the profitable Northeastern market. In comparison to its peers, the revenue obtained per mile, and the revenue obtained per carload and ton originated were the highest. However, due to higher operating costs than its peers, Conrail also happened to be the least profitable of the three northeastern companies. This makes Conrail a company that, with proper management and cost cutting intitatives, could easily become extremely profitable and thus a welcome acquisition. Furhtermore, Conrail also played a major part in connecting Northeastern cities with their mid western counterparts and controlled 29.2% of the eastern rail freight market.
These are factors that make Conrail an extremely attractive target for acquisition since an aquirer would gain market share, 10,701 miles of railroad track, and room for maming potentially high profits after cost cutting measures have been implemented. Making Conrail a scarce jewel. 2. Discuss in detail the motives in acquiring Conrail for;
a. CSX (3.5mks)
Synergy and economies of scale.
The rail road market in the United States is a mature market, this means that any significant growth can only be obtained by mergers and acquisitions. A merger of CSX and Conrsail would result in 70% of the Eastern market and a projected $8.5 billion in revenue. The new company

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