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| -Short Attention Span Theater- |
| Buffett's firm to buy Burlington Northern |
| 2009-11-04 |
| Warren Buffett's Berkshire Hathaway said Tuesday it will buy railroad operator Burlington Northern Santa Fe for $44 billion. Berkshire (BRKA, Fortune 500), which already has major stake in Burlington Northern, said it would acquire the remaining 77.4% of the company in a cash-and-stock offer worth $100 per share. Widely regarded as both one of the world's richest men and the investment community's more brilliant minds, Buffett called his firm's investment an "all-in wager on the economic future of the United States." "Our country's future prosperity depends on its having an efficient and well-maintained rail system," Buffett said in a statement. Burlington Northern (BNI, Fortune 500) shares soared 28% in morning trading on the news. Separately, Berkshire said it was announcing a 50-for-1 split of its Class B common stock. The majority of stock issued by the company in its purchase of Burlington Northern will be its pricier Class A shares, the company said. The deal, which would rank as the largest acquisition in Berkshire Hathaway's history, would also include $10 billion of Burlington Northern debt. It would also expand the already massive portfolio of companies Berkshire already owns. Brand-name businesses such as auto insurer Geico, See's Candy and Fruit of the Loom are all subsidiaries of the Omaha, Neb.-based firm. Matthew Rose, Burlington Northern's chairman and CEO, said the sale of the Fort Worth, Texas-based firm was a "strategic fit" for both the company's customers and employees, during a conference call with investors Tuesday. No management changes are expected at Burlington Northern as a result of the deal, which is expected to close sometime in early 2010. Berkshire's purchase, of course, will require the approval of shareholders and will have to undergo regulatory review by the Justice Department. |
| Posted by:gorb |
| #5 Hard to knock, if you take a long enough time frame. Railroads are a very limited commodity, and it is virtually impossible to add new ones. They are the most energy-efficient method of moving bulk cargo across the country. BNSF is one of the very best positioned railroads. If you assume energy costs will continue to rise (safe bet, long term) then railroads will be a good investment. If they don't go bankrupt first. And if the government doesn't nationalize them or otherwise block your investment return. |
| Posted by: Glenmore 2009-11-04 22:09 |
| #4 And this brings about OWG-NWO [George] JETSONIAN AIR, SPACE RAIL BULK TRANSPORT - HOW, again??? But I digress .... |
| Posted by: JosephMendiola 2009-11-04 20:09 |
| #3 Actually, BNSF is also a major corn and grain hauler. |
| Posted by: Pappy 2009-11-04 19:57 |
| #2 Actually this sounds like Buffet doing a bit of vertical integration coverage. BNSF hauls almost exclusively coal for its cargo, combined with his current energy holdings plus his stance on cap and trade basically seems to cover what hes planning. If it adds a side benefit of making electricity cheaper while making him money I say go for it. |
| Posted by: Valentine 2009-11-04 19:08 |
| #1 This is interesting contrast to the article yesterday about Soros touting China as the new leader. This is a big bet on the US. Only one of these men can be right. Buffett was the only one with the balls to put his money in and not just his mouth. Buffett has bet against the dollar (like Soros) and lost in the past, but when he's taking advantage of weakness while betting on American economic recovery, there's almost nobody better. Ima take Buffett to win and I'll give 6 points to Soros. |
| Posted by: Mike N. 2009-11-04 08:49 |