Warren Buffett Buys Burlington Northern

November 3, 2009

By Chris Winters

Warren Buffett’s Berkshire Hathaway has announced it will buy the 77.4 percent of Burlington Northern Santa Fe Corp. that it does not already own. Priced at $100 per share, or about $44 billion, including the assumption of about $10 billion in debt, it would be the largest deal in Berkshire Hathaway’s history.

Berkshire Hathaway is paying all cash in the deal. Buffett first invested in Burlington Northern in 2007, buying 7.85 million shares, or 17.2 percent of the company.

Our countrys future prosperity depends on its having an efficient and well-maintained rail system, said Buffett in a statement. Conversely, America must grow and prosper for railroads to do well.”

Freight railroads operate 3,628 miles of rail service in Washington state, and Fort Worth, Texas-based Burlington Northern is the largest operator here. But its hauling capacity is hampered by a chokepoint on the Auburn-Pasco line at the Stampede Tunnel, whose ceiling is too low for double-stack container cars. Raising the ceiling would cost at least $25 million.

Subject to review by the U.S. Department of Justice, the acquisition is expected to close in the first quarter of 2010.

Read the original press release from Berkshire Hathaway here. Stories are also posted at Seattlepi.com here and at the New York Times here.