Buffett bets on Burlington Northern
Berkshire Hathaway Inc., in the largest acquisition in the company’s history, will acquire Fort Worth-based Burlington Northern Santa Fe Corp., along with its assets and subsidiaries, for a total of $44 billion, including $10 billion in debt.
BNSF will continue to operate in Fort Worth, but will become a wholly owned subsidiary of Berkshire Hathaway, a holding company based in Omaha, Neb.
Berkshire Hathaway announced Nov. 3 it will purchase BNSF’s remaining 77.4 percent of outstanding shares it does not currently own, to increase the company’s holdings to 100 percent. The company will pay $100 per share in cash and stock. The transaction should be completed in the first quarter of 2010, according to information on the BNSF Web site.
“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” said Warren E. Buffett, Berkshire Hathaway chairman and CEO, in a statement. “Conversely, America must grow and prosper for railroads to do well. Berkshire’s $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry.”
Buffett added that the investment is an “all-in wager” on the economic future of the United States.
Berkshire Hathaway has made significant purchases of BNSF stock over the past several years, growing its stake to 18 percent and 22 percent in 2008 and early 2009, respectively, with stated intentions to gather more.“We are thrilled to have the opportunity to become a part of the Berkshire Hathaway family,” said Matthew K. Rose, Burlington Northern Santa Fe chairman, president and CEO, in a statement. “We admire Warren’s leadership philosophy supporting long-term investment that will allow BNSF to focus on future needs of our railroad, our customers and the U.S. transportation infrastructure. This transaction offers compelling value to our shareholders and is in the best interests of all of our constituents including our customers and employees.”
Goldman, Sachs & Co. and Evercore Partners Inc. acted as financial advisers to BNSF. The company’s legal counsel is Cravath Swaine & Moore LLP. Berkshire Hathaway’s transaction counsel is Munger, Tolles & Olson LLP.
lwimmer@bizpress.net
