Buffett makes his biggest deal

• Source: Global Times
• [13:49 November 04 2009]
• Comments

Renowned investor Warren Buffett announced Tuesday that his Berkshire Hathaway Inc. will pay $26 billion to buy out Burlington Northern Santa Fe Corp (BNSF), the second largest US railroad company, his biggest-ever deal.

Berkshire Hathaway Inc. will pay $100 per share in cash and stock for the remaining 77.4 percent stake of BNSF, which comes to a total of $34 billion. A premium of 31.5 percent over BNSF's closing stock price on Monday was also included.

Berkshire also promised to take care of BNSF's $10 billion debt. When this $10 billion debt is added to the value of the deal, it tops $44 billion, which makes this deal Buffett’s biggest deal.

This deal may lead to him selling some of his other investments, which cover a wide range of companies, from Coca-Cola Co to General Electric Co, some Buffett watchers pointed out.

However, Buffet said, "It's an all-in wager on the economic future of the United States. I love these bets."

"Buffett has always stated that he likes the longer-term viability of the rails ... but people really weren't paying attention," said Lee Klaskow, analyst with Longbow Research. "This is shining a spotlight on this group, bringing more investors into the fold," he added.

Buffett is one of the world's most famous investors and is well-known for making big long-term bets.

The deal is expected to be completed in the first quarter of 2010.