Insurance Underwriter, Power & Coal - Mergers and Acquisitions
| Berkshire Hathaway offer represents premium to Burlington Northern share price |  |
November 03, 2009 11:25 AM ET
By Kelly Durkin
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Berkshire Hathaway Inc.'s offer to purchase Burlington Northern Santa Fe Corp. represents about a 30% premium to the latter's recent stock price, offering a compelling value while providing shareholders an opportunity to participate in future growth through Berkshire Hathaway shares, Burlington Northern executives said Nov. 3. Berkshire Hathaway announced earlier that morning that it reached a definitive agreement to acquire the Fort Worth, Texas-based railroad operator. Under the terms of the deal, Berkshire Hathaway will pay $100 per share in cash and stock to purchase the 77.4% stake in Burlington Northern that it does not already own. The transaction is worth about $44 billion, including $10 billion of outstanding Burlington Northern debt, Berkshire Hathaway's largest deal ever. "[Warren Buffett's] investment in BNI provides a solid foundation that will allow us to focus on the future needs of our railroad, our customers and the U.S. transportation infrastructure," Chairman, President and CEO Matthew Rose said during a conference call. CFO Thomas Hund said Burlington Northern expects to file a proxy statement related to the transaction in mid-November and anticipates calling a shareholder meeting to vote on the deal in the first quarter of 2010, with the transaction closing shortly after. The company anticipates that the only material regulatory filings and approvals required in connection with the merger are a filing under the Hart-Scott-Rodino Antitrust Improvements Act at the Department of Justice and other related governmental reviews and approvals. Hund said he expects the appropriate regulatory approvals will be obtained during the first quarter of 2010. Under Delaware law, Burlington Northern is required to obtain a vote of at least 66.67% of the outstanding common stock not held by Berkshire Hathaway. The transaction does not require approval by Berkshire Hathaway's shareholders. "Our country's future prosperity depends on its having an efficient and well-maintained rail system," said Warren Buffett, Berkshire Hathaway's chairman and CEO, in a news release announcing the deal. "Conversely, America must grow and prosper for railroads to do well. Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," he added. "Most important of all, however, it's an all-in wager on the economic future of the United States," Buffett said. "I love these bets." | 
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