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Burning Journal -> BNSF -> Warren Buffett’s Berkshire to buy Burlington Northern for $34 billion
Post Info TOPIC: Warren Buffett’s Berkshire to buy Burlington Northern for $34 billion
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Warren Buffett’s Berkshire to buy Burlington Northern for $34 billion
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Warren Buffetts Berkshire to buy Burlington Northern for $34 billion

(The following appeared on the New York Times website on November 3, 2009.)

NEW YORK Berkshire Hathaway, the investment vehicle of Warren E. Buffett, said on Tuesday that it plans to buy the 77.4 percent of Burlington Northern it doesnt already own for $34 billion in cash and stock, in the largest deal in Berkshire history.

The deal, which will also include the assumption of $10 billion in Burlington Northern debt, represents what Mr. Buffett said was a big bet on the United States. He told CNBC in an interview that railroad operators cannot do well unless American businesses are producing goods and customers are buying them.

Its an all-in wager on the economic future of the United States, he said in a written statement. I love these bets.

In an interview on CNBC, Mr. Buffett said that the deal came together quickly last week, when he made a proposal to Matthew K. Rose, Burlington Northerns chairman and chief executive. Mr. Rose took the proposal to his board and got an answer in about 15 minutes.

We are thrilled to have the opportunity to become a part of the Berkshire Hathaway family, Mr. Rose said in a statement. We admire Warrens 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.

Under the terms of the deal, Berkshire will pay about $100 per Burlington Northern share, a price comprised of about 60 percent in cash and 40 percent in stock. Berkshire deals historically have almost never used stock, but Mr. Buffett told CNBC that Burlington Northern wanted a tax-free component for their shareholders.

As part of the deal, Berkshire will split its class B shares 50-to-1 to help pay for the acquisition. Its an unusual move for Mr. Buffett, who has long said he does not like stock splits.

Of the $16 billion in cash for the deal, Berkshire plans to use $8 billion on its books and $8 billion borrowed from banks, which will be repaid in three annual installments. After the deal, Berkshire will have $20 billion in cash on hand.

I like cash, Mr. Buffett said.

The Burlington deal is the largest for Mr. Buffett since he agreed nearly two years ago to acquire control of Marmon Holdings, the industrial holding company of the Pritzker family, for an initial price of $4.5 billion.

Burlington Northern was advised by Goldman Sachs, Evercore Partners and the law firm Cravath Swaine & Moore. Berkshire was advised by the law firm Munger, Tolles & Olson.

Tuesday, November 03, 2009



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Berkshire Hathaway press release on BNSF transaction

(Berkshire Hathaway Inc. issued the following on November 3, 2009.)

FORT WORTH, Texas and OMAHA, Neb. The boards of directors of Berkshire Hathaway Inc. (NYSE: BRK.A; BRK.B) and Burlington Northern Santa Fe Corporation (BNSF; NYSE: BNI) today announced a definitive agreement for Berkshire Hathaway to acquire for $100 per share in cash and stock the remaining 77.4 percent of outstanding BNI shares not currently owned to increase its holdings to 100 percent. Based on the number of outstanding BNI shares (including shares currently owned by Berkshire) on Nov. 2, 2009, the transaction is valued at approximately $44 billion, including $10 billion of outstanding BNSF debt, making it the largest acquisition in Berkshire Hathaway history.

Our countrys future prosperity depends on its having an efficient and well-maintained rail system, said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer. Conversely, America must grow and prosper for railroads to do well. Berkshires $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry.

Most important of all, however, its an all-in wager on the economic future of the United States, said Mr. Buffett. I love these bets.

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 chief executive officer. We admire Warrens 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.

Terms of the Transaction

The definitive agreement provides that each share of BNI common stock will at the election of the shareholder be converted into the right to receive either (i) a cash payment of $100.00 or (ii) a variable number of shares of Berkshire Hathaway Class A or Class B common stock, subject to proration if the elections do not equal approximately 60 percent in cash and 40 percent in stock. The stock component of the consideration is subject to a collar whereby the value of each Berkshire Hathaway share received is fixed at $100.00 if the price of Berkshire Hathaway Class A stock at closing is between approximately $80,000.00 and approximately $125,000.00 per share. If the value of Berkshire Hathaway Class A stock is outside of this collar range at closing, then the number of shares received of Berkshire Hathaway Class A stock will be fixed at either 0.001253489 per BNI share for values below the collar range, or 0.000802233 per BNI share for values above the collar range. The shareholder may receive Class A or, in lieu of fractional Class A shares, equivalent economic value of Class B Berkshire Hathaway shares, subject to certain limitations as described in the definitive agreement.

The transaction requires approval by holders of two-thirds of BNIs outstanding shares (other than shares held by Berkshire Hathaway), and customary closing conditions, including Department of Justice review. Closing is expected to occur during the first quarter of 2010.

BNSF Railway Company will continue to focus on providing outstanding service to its customers from its Fort Worth, TX headquarters. Included in the transaction are all assets and subsidiaries of BNSF.

Goldman, Sachs & Co. and Evercore Partners, Inc. acted as financial advisors to BNSF and the companys legal counsel is Cravath Swaine & Moore LLP. Berkshire Hathaways transaction counsel is Munger, Tolles & Olson LLP.

At 8:30 a.m. eastern, BNSF executive management will conduct a briefing for investors and other interested parties. The briefing will be Web cast and available via the investor relations section of www.bnsf.com. The call in number is (800) 398-9367 and the replay number is (USA) (800) 475-6701, (International) (320) 365-3844, and access code 122409. The briefing will not include a question and answer session.

BNSF is a holding company and through its principal operating subsidiary, BNSF Railway Company, BNSF owns and manages one of the largest railroad systems in North America.

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities including property and casualty insurance and reinsurance, utilities and energy, manufacturing, retailing and services.

Tuesday, November 03, 2009



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Rail companies up after Berkshire-BNSF offer

(Reuters circulated the following on November 3, 2009.)

NEW YORK Shares of U.S. rail companies rallied in premarket trading on Tuesday, after Berkshire Hathaway (BRKa.N) agreed to buy Burlington Northern Santa Fe (BNI.N) for $100 per share in cash and stock.

Burlington shares surged 28 percent to $97. Among the company's peers, Union Pacific (UNP.N) gained 8.1 percent to $59.50, CSX Corp (CSX.N) was up 8.5 percent to $46.50 and the iShares Dow Jones Transportation Average ETF ITY.P climbed 1.4 percent to $65.15.

Tuesday, November 03, 2009



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Buckethead


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Ha! My broker called this morning and woke me up! Seems the 1700 shares of BNsf stock I own, has just become some serious cash...

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I'm waiting for my Rock Island stock to shoot through the roof.

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Freddie Krueger


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Congrats Bucket! Your a winner! It is nice to hear someone hit something.

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Buckethead


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Freddie Krueger wrote:

Congrats Bucket! Your a winner! It is nice to hear someone hit something.


Let's see what it turns out to be after the fees are paid...

 



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Cy Valley


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Does Warren like Matt?

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Buckethead


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Cy Valley wrote:

Does Warren like Matt?


Lets hope not...

 



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Cy Valley


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Bucket, now you can afford to host the Summit! Party at Bucket's country estate.

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Freddie Krueger


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Yeah! Tycoon Buckethead, just like Jay Gould.

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Buffett Now Still Fucked

-- Edited by Troll on Tuesday 3rd of November 2009 04:13:44 PM

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Uke


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Ah shit! Looks like we're all gonna end up workin' for bNSf no matter how ya slice, or dice it!

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Hmm. That address doesnt look right.
It looks like the link pointing here was faulty.

Gah. Your tab just crashed.
Uke


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Serious cash it is...$170,000! You're the de facto host for the BurningJournaldotcom 2010 Summit! Like it or don't!

Briz's neighbors refused ta allow any more partying on the cul de sac... Krink's got way too many spiders, so that's out!

Black Dog won't let us near his place. Snippy just hosted 2009... And since Troll pricked Snippy's best air-mattress, and Troll's arrest...we can't go there again.

My place is too small. And cold. And rainy. Maybe FMB? He's got a cabin...although security IS a problem with lost keys, and shit...

Freddie's dealing with a transit strike, so that's out...'sides his roomies hate railroaders. How 'bout *Cy's place?

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Hmm. That address doesnt look right.
It looks like the link pointing here was faulty.

Gah. Your tab just crashed.
Cy Valley


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Cy also lives on a cul-de-sac.

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