3 shareholder lawsuits filed after BNSF deal with Buffett
(The following story by Bob Cox appeared on the Fort Worth Star-Telegram website on November 13, 2009.)
FORT WORTH, Texas The ink was hardly dry on the news release announcing that Burlington Northern Santa Fe Corp. had agreed to be acquired by billionaire investor Warren Buffett before lawsuits began to cascade into court over the deal.
Within a week of the deals announcement or in one case, on the same day at least three lawsuits were filed in Tarrant County district court, all of them alleging that BNSF management shortchanged stockholders. The suits allege that BNSFs management and directors rushed into a deal with Buffetts Berkshire Hathaway for their own benefit and failed to get the highest price.
All three lawsuits seek class-action status on behalf of all BNSF stockholders.
Dallas attorney Joe Kendall, a federal judge in Texas from 1992 to 2002, was the first to the courthouse with a lawsuit filed at 4:50 p.m. Nov. 3, the day BNSF and Buffett announced the proposed deal. He followed that with a second suit Monday, on behalf of a different plaintiff but with identical pleadings and also seeking class action.
The suit filed by Kendall alleges that BNSF management "will reap disproportionate benefits" from the terms of the proposed sale "instead of attempting to negotiate a contract reflecting the best consideration reasonably available for the Companys stockholders."
Berkshire Hathaway agreed to pay $100 a share in cash and stock for BNSF in a deal the noted investor hailed as an "all-in bet" on both the railroad and the U.S. economy. The price was a 32 percent premium over BNSFs closing stock price on Nov. 2, the day before the deal was announced.
BNSF spokesman John Ambler declined to comment on the allegations.
"Unfortunately it has become almost a universal occurrence for certain law firms to file lawsuits of this type around any corporate [merger and acquisition] activity," he said. "Beyond that, its not appropriate to comment since this is a matter of pending litigation."
