TALKING POINT/SANTA FE SOUTHERN &lt;SFX>

  Santa Fe Southern Pacific Corp may have
  more difficulty combining its two railroads than fending off a
  possible takeover by Henley Group &lt;HENG>, which has accumulated
  almost a five pct stake in the real estate and railroad
  conglomerate, analysts said.
      Takeover speculation has surrounded Santa Fe since Henley
  disclosed its stake in the company earlier this week, but
  analysts and a Santa Fe official were skeptical a takeover is
  its intention.
      Analysts also said the company has strong defenses that
  would easily deter any suitor - one of those being its problems
  combining its two railroad properties, which hang in regulatory
  limbo.
      Richard Fischer of Merrill Lynch and Co Inc said that Santa
  Fe at December 31 had 580 mln dlrs in cash and cash
  equivalents, while its long-term debt to capital was just over
  25 pct. "This gives them plenty of borrowing power," he said,
  which could be used against an unwanted suitor.
      Henley Group's Chairman Michael Dingman has said he wants
  to take major positions in undervalued natural resource
  companies. He also told Reuters in an interview he is seeking
  an acquisition of from two billion to eight billion dlrs.
      Santa Fe officials don't appear concerned that Henley might
  launch a takeover. "I would not characterize the atmosphere
  around here as one of concern," one Santa Fe executive said
  about Henley.
      "I think it's wrong to assume Dingman has formed a firm
  strategy with Santa Fe," said Mark Hassenberg, who covers
  Henley for DLJ Securities.
      Analysts say the potential of Santa Fe's land assets are
  likely to be realized slowly. They add that Santa Fe's efforts
  to merge its two railroads remain in regulatory limbo,
  sidetracking many of its strategic plans for the foreseeable
  future.
      These realities, they said, support the Henley Group's
  statement that its Santa Fe stake is only an investment.
      The more pressing problem facing Santa Fe is overcoming
  difficulties in merging its two railroads, the Atchison, Topeka
  and Santa Fe Railway Co and Southern Pacific Transportation Co.
  The merger would create the nation's second-longest railroad.
      Last July the Interstate Commerce Commission (ICC) denied
  the merger on anticompetitive grounds.
      The company since has granted trackage-sharing rights to
  four western railroads to meet the ICC's concerns and persuade
  it to reopen the hearings in its three-year-old struggle to
  merge the lines.
      "My guess is the commission will decide in three to six
  weeks whether to reopen hearings," Fischer said.
      "I believe they've made an effort to satisfy the ICC's
  objections," he said. "But in doing so they haven't pleased
  everyone. Before they had Burlington Northern on their side,
  now Burlington is opposed to the way trackage rights are set
  up."
      If the hearings are reopened, analysts predicted it will
  take six to nine months for everyone to have their say, and up
  to another year for the ICC to decide.
      Santa Fe is in the midst of a 50-mln-share stock buyback
  program begun in 1984. It has bought back 33.7 mln shares as of
  February 1, when it had 154.7 mln shares outstanding, a
  spokesman said.
      Among the shares repurchased were two stakes owned by
  Norfolk Southern, one of 3.4 mln shares bought in 1986 and
  another of 1.7 mln shares in 1985, one analyst said.
      James Voytko at Paine Webber believes Santa Fe could fight
  off the Henley Group with its cash and credit. Citing the share
  buybacks from Norfolk Southern, he said one of Santa Fe's
  options, if threatened, could be to buy the Henley stake.
      "It is indeed possible that Dingman sees this as a
  low-risk, opportunistic investment," Voytko said.
      "People who follow Santa Fe have given me values of 45 dlrs
  to 50 dlrs a share," said DLJ Securities' Hassenberg. "But I'm
  certain that in Dingman's mind, the company is worth more than
  that in breakup value."
  

