Tuesday, February 16, 2010

Buffett's Berkshire Closes Deal on BNSF Takeover

Warren Buffett's Berkshire Hathaway Inc. on Friday closed a takeover deal of Class I railroad Burlington Northern Santa Fe.

The takeover will see BNSF, one of the two major railroads servicing the Western United States, become part of a Berkshire subsidiary.

Buffett announced three months ago that Berkshire intended to purchase the 77.4 percent of BNSF that it did not already own. In the November 3 takeover bid, Berkshire offered $100 per outstanding share of BNSF stock, which at the time represented a more than 30 percent premium over the going per share price. Under the terms of the takeover bid, BNSF was valued at $44 billion, including $10 billion in debt.

According to the exchange agent for the merger, as of Friday there were just over 264.5 million outstanding shares of BNSF, not including the shares previously owned by Berkshire. Just under 150 million of the outstanding BNSF shares were paid out in cash with the remaining 114.6 million BNSF shares paid out in a 92.5/7.5 percent mix of Berkshire Class A Common Stock and cash.

In total, Berkshire will issue just under 81,000 shares of Berkshire Class A stock and pay out $15.87 billion in cash.

Berkshire CEO Buffett said on Thursday, "Tomorrow begins the first century of ownership of BNSF by Berkshire Hathaway. I'm looking forward to every day of it as our railroad does its part to ensure the future prosperity of the country."

BNSF operates more than 32,000 route miles of track in 28 U.S. states and two Canadian provinces.