Breaking News: Berkshire Splits B Shares 50:1 and Buys BNSF

Published on November 3, 2009

Berkshire Hathaway will acquire Burlington Northern Santa Fe for $100 per share in a cash and stock transaction:

The boards of directors of Berkshire Hathaway Inc. and Burlington Northern Santa Fe Corporation 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.”

And now for the whopper:  Berkshire will split its class B shares 50:1 to facilitate the transaction.

Berkshire Hathaway Inc. today announced that its Board of Directors approved a 50-for-1 split of its Class B Common Stock. The stock split is subject to the approval of Berkshire’s shareholders, who must approve an amendment to Berkshire’s certificate of incorporation to increase Berkshire’s total number of authorized shares of common stock, as well as the total number of authorized shares of Class B Common Stock, in order to permit the consummation of this split. Berkshire’s Class A Common Stock is not being split. Berkshire has not yet set the date for the special meeting of its shareholders to vote on the amendment to its certificate of incorporation, or the record date for the stock split.

More information and analysis on these transactions will be posted here later today as information becomes available and the initial shock of reading “stock split” and “Berkshire Hathaway” in the same press release fades …

Disclosure:  The author owns shares of Berkshire Hathaway.

Breaking News: Berkshire Splits B Shares 50:1 and Buys BNSF