All aboard the Buffett express …choo, choo! | FT Alphaville

All aboard the Buffett express …choo, choo!

Is this the most expensive train set ever?

Thomas the Tank Engine - hornby

No it’s this one!


Yup, yup. In one fell swoop Warren Buffett has potentially achieved an ambition of a lifetime and got himself a train set (that is, if it really is every schoolboy’s dream to own a model, or in Buffett’s case actual, railway right?)

Indeed, Berkshire Hathaway on Tuesday said it would be buying railroad company Burlington Northern Santa Fe for no less than $44bn, the firm’s biggest ever takeover under Buffett.

According to the BNSF’s press release Berkshire will purchase a 77.4 per cent stake in the railroad it doesn’t already own for $100 a share in cash and stock to achieve outright ownership.

Buffett, meanwhile, puts his new found passion for the railways down to nothing more than an all out wager on the economic future of America. Very Rooseveltian stuff. Here’s the sum of it:

FORT WORTH, TX / OMAHA, NE — Nov. 3, 2009 — The boards of directors of Berkshire Hathaway Inc. (NYSE: BRK.A;BRK.B) and Burlington Northern Santa Fe Corporation (BNSF; NYSE: BNI) today announced a definitive agreement for Berkshire Hathaway to acquire for $100 per share in cash and stock the remaining 77.4 percent of outstanding BNI shares not currently owned to increase its holdings to 100 percent.

Based on the number of outstanding BNI shares (including shares currently owned by Berkshire) on Nov. 2, 2009, the transaction is valued at approximately $44 billion, including $10 billion of outstanding BNSF debt, making 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,” said Mr. Buffett.  “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 chief executive officer. “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 U.S. 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.”

Related link:
The Buffett effect
– FT Alphaville