It's because you're undefing $/. That's what the perl runtime uses to determine the line-break character (or string). (Well, technically, line-end string, but let's not get carried away.) Comment out that line, and you'll get what you expect.

If you need it for other things, you should localise your changes - see local. e.g.:

{
  # I want to slurp here.
  local $/;
  # sluuuuuuuurrrrrp...
}
# $/ is back to normal here.
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