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Berkshire Hathaway Buying Burlington Northern

by Hugh Askew | November 3, 2009 at 09:31 am

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Omaha based Berkshire Hathaway, owned by famed investor Warren Buffet, annouced today that it would purchase the Burlington Northen Railroad.

The deal, valued at $34 Billion, would be Buffet's largest purchase ever.

Berkshire Hathaway ownership of the railroad would put the control of the countries two largest railroads in Omaha. The Union Pacific Railroad laid down it's first rail there in 1865.

Buffet, with a habit of buying cheap when others cannot, has plenty of cash on hand. $8 Billion of the purchase price will be financed by low interest loans.

Berkshire Hathaway, a $150 Billion conglomerate, has ownership in a wide range of companies, ranging from furniture to insurance.

The purchase will be widely seen as Buffet's bet on an economic recovery.

Warren Buffet's Berkshire Hathaway said it has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.Berkshire Hathaway Inc. already owns a stake of about 22 percent in Burlington Northern, and says it will pay $100 a share for the rest of the company.The deal announced Tuesday has been approved by the boards of both companies.It would be the biggest acquisition ever for Berkshire Hathaway Inc.

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PIM of SPAIN

at 12:24 on November 3rd, 2009

I wouldn't bet on his success. Interesting to follow and again in a few years down the road.

Like the efforts put into electric cars that aren't environmental friendly at all. Only political motivated, due to the subsidies and stimuli. No one by his senses would put money in such projects.

Amy Judd

at 16:05 on November 3rd, 2009

Wow, that's a lot of money

PIM of SPAIN

at 02:46 on November 4th, 2009

And now the reality: Published last week, the Association of American Railroads reported a steep decline in rail traffic:

Rail traffic remains down year over year for the week ended Oct. 24, 2009. U.S railroads reported originating 276,357 carloads, down 14.8 percent compared with the same week in 2008 and 17.3 percent from 2007.

A 14.8% decline should cause concern to any bulls out there. If you are going to make any money in this market, you need to look beyond the government sponsored green shoots to see weeds sprouting up everywhere.