Union Pacific Corp. Tuesday dropped its $3.6 billion cash offer for Santa Fe Pacific Corp., terminating a $3.7 billion bank loan.
Union Pacific had secured a well-received $3.7 billion syndication - led by Citicorp, NationsBank, and Credit Suisse - to cover an $18.50 per share unsolicited offer for its rival railroad.
The move clears the tracks for Burlington Northern Corp., which has offered $4 billion for Santa Fe. Burlington is backed by a $500 million loan led by Chemical Bank. Its bid is supported by a $1.56 billion loan to Santa Fe led by J.P. Morgan & Co., Chemical, Chase Manhattan, Union Bank of Switzerland, and Goldman, Sachs & Co.
Union Pacific had lost a legal battle this week when the Delaware Chancery Court refused its request for a quick hearing on the validity of Santa Fe's poison pill.
Union Pacific had increased the size of its loan from the original $2 billion.