Buffett says Burlington purchase not a bargain for Berkshire
(Bloomberg News circulated the following on November 15, 2009.)
NEW YORK Berkshire Hathaway Inc.s Warren Buffett, who agreed to buy Burlington Northern Santa Fe Corp. in his biggest takeover, said the railroads results in the next 100 years will justify a $26 billion bid thats not a bargain.
Its a good asset for Berkshire to own over the next century, Buffett said in an interview with Charlie Rose broadcast yesterday on PBS. You dont get bargains on things like that. Its not cheap.
Buffett is borrowing about $8 billion and risking Berkshires AAA credit rating at Standard & Poors to buy the railroad in what he calls an all-in wager on the future of the countrys economy. The stock-and-cash bid, announced on Nov. 3, values Fort Worth, Texas-based Burlington at $100 a share, 31 percent more than its closing price the day before.
It was an opportunity to buy a business thats going to be around for 100 or 200 years thats interwoven with the American economy in a way that, if the American economy prospers, the business will prosper, Buffett said.
Buffett is investing Omaha, Nebraska-based Berkshires $26.9 billion cash as the U.S. shows signs of pulling out of recession. The U.S. economy returned to growth in the third quarter, expanding at a 3.5 percent pace, according to the Commerce Department.
Goldman, General Electric
Last year, as stocks plunged and credit markets froze, Buffett extended financing to firms including Goldman Sachs Group Inc. and General Electric Co., and he agreed to buy Constellation Energy Group Inc. The Constellation deal was scuttled after a competing bid from Electricite de France SA trumped Berkshire.
Buffett agreed to pay 18.2 times Burlington estimated 2010 earnings of $5.51 a share, according to the average analyst projection in a Bloomberg survey before the deal was announced. That compares with the 13.4 multiple for the Standard & Poors 500 Index as of Nov. 2.
The company wasnt egregiously cheap, said Guy Spier, a principal at hedge fund Aquamarine Funds LLC, which owns Berkshire shares. It could be five years before the logic of Burlington Northern becomes clear, he said.
Buffett, the second-richest American, built Berkshire by buying out-of-favor stocks and acquiring companies with what he says are enduring advantages over competitors. Berkshire, with units that sell insurance, energy, ice cream and underwear, posted two straight profit gains after its worst loss in at least 20 years in the first quarter.
Good Investment
Buffett said he had already sold Berkshires stakes in Burlingtons competitors. His company owned about 9.56 million shares of Union Pacific Corp. and 1.93 million shares of Norfolk Southern Corp. as of June 30, according to a regulatory filing.
Ive done that just to facilitate the transaction, Buffett said. I think they are good investments. I would have held them had this hadnt happened.
Buffett said he also has a toy railroad set in his attic, adding I hope they dont make me sell it for antitrust reasons.
Although I don't know Warren's exact time of birth, these transits are going on with him thru November.
Before Nov 1 2009 - Beyond Nov 30 2009, Transiting Uranus is Quincunx your Natal Venus
With the arrival of this Uranus transit to your natal Venus may come the realization that perhaps all is not as well as it could be in your love and relationship life. If you are in a relationship, you could start feeling bored and restless, especially if the two of you have settled into a comfortable groove. Whatever the current status of your relationship life, you will introduce changes to it, especially if it has become a bit pedestrian. Be aware of one important thing, if your relationship isn't in the best shape, this transit could bring it to an end. If you are not in a relationship and have been suppressing your desires, you may begin to feel restless and emotionally frustrated. Whichever of the above situations applies to you, expect things to change in love and expect the unexpected. This is the classic "love at first sight" combination; however it is also associated with attractions that form suddenly and terminate just as quickly. Therefore, do not expect permanency in love from this transit. Instead, keep yourself in the moment and enjoy it for what it most likely is - an attraction of short duration. Aside from relationship matters, this combination is a boon to artistically creative people searching for new and original ideas and expressions. Under special circumstances, this transit can be a trigger for pregnancies and births.
Before Nov 1 2009 - Beyond Nov 30 2009, Transiting Pluto is Opposition your Natal Mars
This is a potent transit. Positively, you will probably have more energy and ambition than usual now. You have the capability to achieve a great deal through single-mindedness and determination. Quite possibly, you may push yourself to the limit or to the point of physical, mental and emotional exhaustion now. Less positively, there can be power struggles with others involving issues of dominance and subservience. You may feel under pressure from another or others during this period. Arguments can be emotionally intense now. Avoid contact with negative or destructive people and to stay out of tough neighborhoods.
Before Nov 1 2009 - November 16, 2009, strongest around November 6, 2009, Transiting Jupiter is Sesquiquadrate your Natal Mercury
You are motivated now by the urge to expand your outlooks on life and broaden your horizons. You are currently well-aspected for local and international travel or higher education and intellectual work, and success in any of these areas is to be expected, providing you have done the required preparatory work. However, don't expect to pass an exam on the strength of this transit alone; your results will reflect your prior efforts. You will have big plans at this time; just make sure that they are reasonable and realizable. With this transit, there can be a tendency to get so wrapped up with an idea or plan that important details get overlooked or ignored. Therefore, you will benefit from listening to other people's opinions about your ideas, because they can offer constructive criticism and advice. This could be a good time to improve your career prospects, especially in areas related to communication, computing, language, commerce or law.
November 1, 2009 - November 21, 2009, strongest around November 11, 2009, Transiting Saturn is Square your Natal Mars
During this period you will often feel like you are driving with the handbrake on. Advancement will be painfully slow and there will be obstacles to overcome. Other people, circumstances outside of your control, or even your own inertia may hinder your progress, or prevent you from achieving your objectives. Still, you can accomplish a great deal, which will be of lasting value, through applying yourself to the task at hand with tenacity and determination. Avoid high-risk environments and guard against accident proneness.
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If you are in a horror movie, you make bad decisions, its what you do.
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