The boards of directors of Berkshire Hathaway Inc and Burlington Northern Santa Fe Corporation have announced a definitive agreement for Berkshire Hathaway to acquire for $100 per share in cash and stock the remaining 77.4% of outstanding BNI shares not currently owned to increase its holdings to 100%. Based on the number of outstanding BNI shares (including shares currently owned by Berkshire) as of Nov 2, 2009, the transaction is valued at approximately $44 billion, including $10 billion of outstanding BNSF debt. This makes it the largest acquisition in Berkshire Hathaway history.
“Our country’s 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. Berkshire’s $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, it’s an all-in wager on the economic future of the United States. 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 CEO. “We admire Warren’s leadership philosophy supporting long-term investment that will allow BNSF to focus on future needs of our railroad, our customers, and the US 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.”
The 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 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% in cash and 40% in stock.
The transaction requires approval by holders of two-thirds of BNI’s 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 service to its customers from its Fort Worth TX headquarters. Included in the transaction are all assets and subsidiaries of BNSF.