Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) is sending a plan to split the iconic company's Class B shares to a shareholder vote as part of its plan to buy the Burlington Northern Santa Fe Corp. (NYSE: BNI), according to Associated Press.
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Holders of the relatively low-cost shares will vote on a 50-for-1 stock split, already approved by the Berkshire Hathaway board. The date of the vote has not been set.
Berkshire Hathaway said Tuesday that the split is needed to issue B-shares as part of the $34 billion buyout of the Burlington Northern Santa Fe, the largest acquisition in the company's history. Berkshire already owns 22 percent of the railroad.
The majority of the shares issued in the $100-per-share deal will be Class A shares, but holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash will receive Class B shares.
Class A shares are not being split.
Class B common shares, dubbed "Baby Berkshire," was first issued on May 8, 1996. It was created to meet demand from investors who wanted to share in Buffett's legendary investment expertise, but couldn't afford Berkshire Hathaway's original stock. Class A shares remain the highest priced on the New York Stock Exchange. The shares closed Monday at $98,750.
The Class B shares ended the session at $3,265. With the split, each Class B share will be worth $65.30.
Class B shares can never sell for anything more than a tiny fraction above 1/30th of the price of A, according to Berkshire documents. When it rises above 1/30th, Class A shares are purchased and converted to B shares to push it back to the intended ratio.
A Class B share has 1/200th of the voting rights of a Class A share. Class A shares can currently be converted into 30 Class B shares. The conversion privilege does not extend in the opposite direction.
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