Buffett's Berkshire Buys BNSF

Berkshire Hathaway will pay $34 billion for BNSF

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    NEWSLETTERS

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    Billionaire Warren Buffett's Berkshire Hathaway Tuesday agreed to buy Fort Worth-based Burlington Northern Santa Fe Corp.

    Billionaire Warren Buffett's Berkshire Hathaway Tuesday agreed to buy Fort Worth-based Burlington Northern Santa Fe Corp.

    BNSF, the nation's second-largest railroad, is the biggest hauler of food products such as corn and coal for electricity, making it an indicator of the country's economic health. The railroad also ships a large amount of consumer goods -- including items imported from Asia -- from big Western ports like Los Angeles and Seattle.

    Billionaire Bets Big on BNSF

    [DFW] Billionaire Bets Big on BNSF
    Billionaire Warren Buffett's Berkshire Hathaway agrees to buy Burlington Northern Santa Fe Corp. (Published Tuesday, Nov 3, 2009)

    Experts say the country's second-richest man is betting on the nation's economic recovery, giving a boost to Fort Worth in the process.

    "When Warren Buffett moves in to Fort Worth, you better believe good things happen," said Stanley Block of Texas Christian University's Neeley School of Business. "All you have to do is look at Justin and Acme and TTI and other local companies, and this is a signal that he highly approves of Fort Worth."

    BNSF is a big civic player in North Texas. The Fort Worth Chamber of Commerce said it is too soon to tell how the company's Fort Worth-based employees will be affected.

    "But Berkshire Hathaway has a history of buying good companies -- they are a good company, and after they buy companies, they tend to let management continue on the focus that interested Berkshire Hathaway in the first place without cutting labor force," said David Berzina, of the chamber.

    Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground. It would be the biggest acquisition ever for Berkshire Hathaway Inc.

    Berkshire Hathaway already owns about 22 percent of Burlington Northern and will pay $100 a share in cash and stock for the rest of the company. That was 31.5 percent premium on Burlington Northern's Monday closing price. The stock shot up over 28 percent Tuesday, to $97.66 in afternoon trading.

    "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.

    "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 BNSF and plans to offer $100 a share in cash and stock for the rest of the company.

    The deal has been approved by the boards of both companies. It would be the biggest acquisition ever for Berkshire Hathaway.

    Berkshire also owns MidAmerican Energy Holdings, which controls power companies in the Midwest and Pacific Northwest.

    BNSF's tracks run through both regions -- a major coal supply route for power plants.

    Kristi Nelson contributed to this report.