By Lisa Kerner
Charlotte, N.C., Nov. 3 - Burlington Northern Santa Fe Corp. agreed to be acquired by Berkshire Hathaway Inc. for $100 per share in cash and stock, it was announced on Tuesday.
Berkshire Hathaway will acquire the remaining 77.4% of outstanding Burlington Northern shares it does not currently own in a transaction valued at approximately $44 billion, including $10 billion of outstanding debt.
For each share held, shareholders of Burlington Northern can elect to receive $100 in cash or a variable number of shares of Berkshire Hathaway class A or class B common stock, subject to proration if the elections do not equal approximately 60% in cash and 40% in stock.
The stock portion is subject to a collar. The value of each Berkshire Hathaway share received is fixed at $100 if the price of Berkshire Hathaway class A stock at closing is between approximately $80,000 and approximately $125,000 per share.
If the value of Berkshire Hathaway class A stock is outside of the collar range at closing, then the number of class A shares received will be fixed at either 0.001253489 per Burlington Northern share for values below the collar range or 0.000802233 per Burlington Northern share for values above the collar range.
In lieu of fractional class A shares, shareholders may receive equivalent economic value of class B Berkshire Hathaway shares.
Burlington Northern is required to pay a $264 million termination fee under specified circumstances as part of the merger agreement, according to a form 8-K filing with the Securities and Exchange Commission.
Both companies' boards of directors approved the deal, which is slated to close during the first quarter of 2010.
The acquisition will be the largest in Berkshire Hathaway's history, according to a Burlington Northern news release.
Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer, said his company's investment in Burlington Northern is "an all-in wager on the economic future of the United States."
"Our country's future prosperity depends on its having an efficient and well-maintained rail system," Buffett said in the release. "Conversely, America must grow and prosper for railroads to do well."
In connection with the proposed merger, Berkshire Hathaway's board of directors approved a 50-for-1 split of its class B common stock.
B shares are needed to accommodate holders of smaller amounts of Burlington Northern shares who opt for a share exchange rather than a cash payment, Berkshire Hathaway said.
Berkshire Hathaway will announce a special meeting of shareholders for the purpose of approving the split.
Burlington Northern, a Fort Worth transportation company, was advised by Goldman, Sachs & Co. and Evercore Partners, Inc. on the proposed merger.
Berkshire Hathaway is a financial holding company based in Omaha.
| Acquirer: | Berkshire Hathaway Inc.
|
| Target: | Burlington Northern Santa Fe Corp.
|
| Announcement date: | Nov. 3
|
| Transaction total: | $44 billion including debt
|
| Price per share: | $100 in cash or Berkshire Hathaway stock
|
| Termination fee: | $264 million
|
| Expected closing: | First quarter of 2010
|
| Stock price for acquirer: | NYSE: BRK.A; $98,750.00 on Nov. 2; NYSE: BRK.B: $3,265 on Nov. 2
|
| Stock price for target: | NYSE: BNI: $76.07 on Nov. 2
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
