Berkshire Hathaway Inc. (NYSE: BRK.A, BRK. B), the holding company of billionaire Warren Buffett, on Tuesday agreed to buy Burlington Northern Santa Fe Corp. (NYSE: BNI), according to Associated Press.
"Berkshire's $34 billion investment in BNSF is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry," Buffett said in a statement.
Get Rich Penny Stocks is a leading financial publication that is pleased to alert investors of stocks on the move.
Sign Up for our Free Stock Newsletter.
"Most important of all, however, it's an all-in wager on the economic future of the United States. I love these bets," he said.
Berkshire Hathaway already owns about 22 percent of Burlington Northern, and said it will pay $100 a share in cash and stock for the rest of the company, a 31.5 percent premium on Burlington Northern's Monday closing price. Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.
The majority of the stock in the deal will be Berkshire's "A" shares, but Berkshire's board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash. Berkshire's Class B shares closed Monday at $3,265. With the split, each share will be worth $65.30. Burlington shares closed Monday at $76.07. Burlington shares shot up $21.56, or 28.4 percent, to $97.63 in morning trading. Shares of other major rails rose as well.
The deal has been approved by the boards of both companies. It would be the biggest acquisition ever for Berkshire Hathaway Inc.
Berkshire also owns MidAmerican Energy Holdings, which controls power companies in the Midwest and Pacific Northwest. The railroad could be a strategic acquisition because its tracks run right through both regions, a major coal supply route for power plants.
The chairman of MidAmerican Energy has come out vocally against climate change legislation which targets coal-fired power plants.
Burlington Northern Santa Fe is the country's second-largest railroad with a market capitalization -- the market value of the company's outstanding shares -- of about $25.9 billion.
Last month the company reported third-quarter profit dropped 30 percent to $488 million, or $1.42 per share, as people continued to hold back on purchasing goods from stores and industrial production continued to struggle.
Sign up for the Free GetRichPennyStocks Newsletter. To subscribe, enter your e-mail address into the frame at the bottom of this press release or visit our website.
About Us
GetRichPennyStocks is a leading stock web site that allows investors and interested parties to research stocks that are on the move. We also track small cap companies that could be on the brink of a breakout. To feature a company on our web site please contact us at the email listed below.
Please click here to read the full disclaimer.
