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Stock of the Day
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Burlington Northern Santa Fe Corporation (BNI)
Burlington Northern Shares Soared On Acquisition News
As the stock market starts to lose steam, Warren Buffett announced Berkshire Hathaway's biggest acquisition in its history. Berkshire Hathaway (BRK.A: Charts, News, Offers) announced that it is paying $100 per share in cash and stock to acquire railroad operator Burlington Northern Santa Fe (BNI: Charts, News, Offers). Berkshire already has a major stake in the company, and it will acquire 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 and $10 billion of outstanding BNSF debt, the transaction is valued at approximately $44 billion as of November 2, 2009. Is this the spark of life the stock market needs to continue the biggest bull run since the Great Depression?
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Warren Buffett is the Chairman and CEO, as well as the primary shareholder of Berkshire Hathaway. He is widely regarded as one of the world's most brilliant investors in history. When he makes a move, most investors pay attention, but when it's the biggest move of his company's history everyone stops and zooms in on the news. Buffet said in a statement, "Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well." He also added that his firm's investment is an "all-in wager on the economic future of the United States. Buffett uses railroad data as an indicator of the nation's financial health, and he is "all-in" with his bet on our economic recovery. Although Buffett made investment mistakes before, these are generally the exception and not the rule. And some may argue that Buffett does more than just "investing" in companies, so what? It's still a great sign when he's showing this high level of confidence in our economy.
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On a related note, the company's board has approved an unprecedented 50-for-1 split of the B shares to bring the $3,300 something stock into the double digits range. The move is intended to make the transaction easier for Burlington North shareholders who elect to receive Berkshire shares as part of the acquisition.
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The stock market is still hesitating on world economic concerns, dollar valuation, and weakness in the financial sector. However, the move is helping transportation stocks with Burlington moving nearly 30% higher. Berkshire is also higher on the news. One man may not be able to single-handedly maintain market momentum, but this is certainly a good news that investors can use. And if Buffett is willing to bet the farm on the recovery, that's good enough for me.
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Other Stuff Related to Burlington Northern:
Berkshire Hathaway to Acquire Burlington Northern: A Closer Look -- An in depth analysis of the Berkshire acquisition of Burlington North.
Opening View: Can Buffett's Berkshire Buyout of Burlington Boost Bulls? -- Can the largest acquisition in Berkshire Hathaway's (BRK.A: Charts, News, Offers) history spark another bull run for the U.S. stock market?
BNSF to Host Halloween Day Train for 500 Special Children -- BNSF Railway Company, a subsidiary of Burlington Northern volunteers to host children on a special train trip.
Goldman scores on two big M&A deals -- If you recall, Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs not too long ago. Another win for Buffett.
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More Stocks in the News:
Financial News: RBS Suffers Limits On DCM Ops, Bonuses -- The financial sector continues to churn out bad news. This one is regarding Royal Bank of Scotland's (RBS: Charts, News, Offers).
Nokia Siemens Networks to cut nearly 6,000 jobs -- Reduced spending and fierce competition from Chinese telecom equipment maker forces Nokia Siemens (jointly own by Nokia (NOK: Charts, News, Offers) and Siemens (SI: Charts, News, Offers)) to cut jobs.
Stanley sees cost savings in Black & Decker deal -- Two iconic tool makers Stanley Works (SWK: Charts, News, Offers) and Black & Decker Corp. (BDK: Charts, News, Offers) are merging to cut costs.
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Profile |
Click here to view a detailed profile of Burlington Northern Santa Fe Corporation.
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