Berkshire Hathaway to acquire Burlington Northern
November 3, 2009
by Eric Schroeder
— Berkshire Hathaway, Inc. has reached agreement to acquire Burlington Northern Santa Fe Corp., the nation’s second-largest railroad, in a transaction valued at $34 billion. The transaction would be the largest ever for Berkshire Hathaway, which already owns approximately 22% of B.N.S.F.
As part of the transaction, Berkshire Hathaway said it will pay $100 a share in cash and stock for the rest of the company, which equates to a 31.5% premium on B.N.S.F.’s closing price of Nov. 2. Shareholders will have the option of converting their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Berkshire Hathaway said up to 60% of the transaction is cash and 40% is stock.
“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” said Warren Buffett, chairman and chief executive officer of Berkshire Hathaway. “Conversely, America must grow and prosper for railroads to do well. Berkshire’s $34 billion investment in B.N.S.F. is a huge bet on that company, c.e.o. Matt Rose and his team, and the railroad industry.”
Mr. Rose said B.N.S.F. “is thrilled” to have the opportunity to become part of Berkshire Hathaway.
“We admire Warren’s leadership philosophy supporting long-term investment that will allow B.N.S.F. 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.”
Berkshire Hathaway, Inc. is a holding company with a diverse set of business investments, including International Dairy Queen, Inc. and See’s Candies.