Warren Buffet Buys Burlington Northern Sante Fe Railroad
Posted by webmasterNov 3
Nov. 3 (Bloomberg) — Warren Buffett put together the biggest deal in his 44-year career at Berkshire Hathaway Inc. in 10 days.
Buffett, Berkshire’s chairman, was in Fort Worth, Texas, on Oct. 22 for a company board meeting. The next day, he invited Matthew Rose, chief executive officer of Burlington Northern Santa Fe Corp., to meet him at the Ashton Hotel, a 1915 city landmark.
“It was a relatively short conversation,” Rose told Bloomberg Television today. “He told me what he wanted to do and the next day we fired up the process.”
The deal Buffett unveiled to Rose was $100 a share for the 77.4 percent of Burlington not already owned by Omaha, Nebraska- based Berkshire, and Rose said he would take it to his board, according to a person familiar with the matter, who spoke on condition of anonymity because the talks were private.
Over the weekend, Rose hired his longtime financial adviser, Goldman Sachs Group Inc., to analyze the bid. Goldman’s team included bankers Marc Nachmann and Dusty Philip. Rose also added George Ackert and Roger Altman of Evercore Partners Inc., a New York-based boutique.
Part of the reason Burlington’s board wanted Evercore as a second adviser was that Berkshire owns a $5 billion stake in Goldman Sachs, said the person with knowledge of the situation.
Burlington Board Approves
Buffett, Rose and their advisers spent the next week working out the deal. Burlington’s board approved the sale yesterday in Detroit, because lead director Edward Whitacre, who is chairman of General Motors Co., needed to be there for a GM board meeting, the person said. Berkshire’s board approved the deal last night, and Buffett announced it today.
Berkshire will pay $26 billion, or $100 in cash and stock. Including Buffett’s previous investment and the assumption of debt, the deal’s value is about $44 billion, Berkshire said in a statement.
Berkshire didn’t disclose using any financial advisers on the transaction. Buffett turned to his longtime outside lawyer, Robert Denham at the Los Angeles firm of Munger, Tolles & Olson LLP, for legal advice, and Burlington used a team from New York- based Cravath Swaine & Moore LLP, including Scott Barshay, George Zobitz and Damien Zoubek.
To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net
AMERICANS KEEP SNORTING...
Nice picture man. I copied and pasted to all of my friends.
And so another railroad dies, making us ever more dependent on big government.
Well, I see no railroads dying, Don't knoww what you are talking about. In fact, Buffets purchase of BNSF insures that the railroads will be around long after I am gone. JD
Rail transport, especially electrified rail, is much more efficient, and less damaging to the environment, than transportation by car or truck. It can help to dramatically reduce energy use and carbon emission. Even better, it's a win/win scenario for the economy, the environment and the fight against global warming.
http://www.selfdestructivebastards.com/2009/11/ca...
Yes electrified rail is more efficient than diesel electric, but its also very costly to make track and build. Diesel electric is so much more efficient than a diesel truck because once you get the load rolling, its pretty easy to keep it rolling, at least til you hit a grade. JD
Well, that's fair enough. The point is rail, electric or not, is much better than trucks.
Sorry man, I had a point I was trying to make there, but I work in the industry, and I work on diesel electric locomotives. For what they do, they are actually amazingly efficient. In fact when I got in the industry, I had no idea how they worked. But now, understanding that they generate their own power and turn it into motive force, its pretty amazing. Thanks for dropping a line man. JD
Well if we could get the railroads to let whole trucks and cars onto them to travel across country in a timely manner we would save Billions of gallons of gasoline every year. The problem is that the RR system is so screwed up and slow that its faster to transport via truck. Pretty sad. Tried getting a RR car with stuff from one destination to another and they told me it was going to take a MONTH!!! A MONTH! It took a day and a half by truck. That is the problem with the railroads in the USA today. The RR companies have it easy and are not looking to expand. Cities are crunching RR companies into running trains at only certain times during the day instead of doing the smart thing and building overpasses.
A RR is I forget how many more times more effiicient than a truck. Its rediculously large number to haul freight. Oh yea, if we had roll on roll off capability on trains where drivers either stayed in their cabs or in a dedicated car we wouldn't be spending so many Billions on upkeeping Highways either. Cars don't destroy the highway. Trucks do all the damage. Or nearly all. Especially north where frost is a bigger concern. Ohio/Illinois/NewYork etc.
Thanks for the comment. Don't know when the last time was that you checked, but the railroads are pretty efficient at moving freight from point A to point B. Of course the railroads don't have roads that go directly to your front door, but they can move products from the Los Angeles Harbor to the mid west in two days. JD