General Discussion

http://sbj.net/main.asp?SectionID=18&SubSectionID=23&ArticleID=85743

Will be interesting to see what his friend Bill Gates does. He too has been investing in rail stock and has the ability to purchase a railroad..maybe CN.

Since Mr. G and Mr B are friends, I think NS should be considered. 

I don't like the idea of Buffet owning BNSF entirely.  Look at the trouble CSX has had with their investor, Children's Fund or whatever it's called.  Diverse ownership keeps corporate raiders from raping companies and walking.  I would hope BNSF employees wise up quickly and start taking any legal steps needed to protect their interests in the company.  Also if Bill Gates, decides to buy, oh lest say for the sake of argument, NS, then decides to sell it to Buffet, no permission is needed from the goverment, as it is not a merger, but a privately company being sold by one individual to another. WISE UP PEOPLE.  R. Staller

Berkshire Hathaway is the buyer..so Buffet won' be the owner...Buffet's has a stake in Berkshire Hathaway and will to that extent have a stake in BNSF...but that does not equate to Buffet owning BNSF.

Single person or entity ownership may not be a bad thing...after all..most businesses are owned by one person or a small partnership of individuals.  I am 100% owner of a business and from my vantage point that's not a bad thing. One owner...or a small group of owners.. can make decisions much more rapidly than a public company with investors who often need to be consulted on major decisions. This means that a smaller business can often turn on a dime and can run laps around a large company where decisions can take months to make.  BNSF may enjoy the benefits of a small concentrated ownership that is capable and can make decisions quickly. Your example of Childrens' Investment Fund isa good one and really illustrates what can go wrong when ownership and management interests aren't aligned. I don't think that will be a problem with Buffet at the helm.

 I am amazed at how many people who do not read the forums and post the same story.

“This is all happening because my father didn’t buy me a train set as a kid,” Mr. Buffett said.

Rich

rstaller:

... Also if Bill Gates, decides to buy, oh lest say for the sake of argument, NS, then decides to sell it to Buffet, no permission is needed from the goverment, as it is not a merger, but a privately company being sold by one individual to another. WISE UP PEOPLE.  R. Staller

Both Berkshire and Microsoft are publicly traded companies. It is not the individual buying the railroad, just a conglomerate. 

Jay

Ulrich:

  Berkshire Hathaway is the buyer..so Buffet won' be the owner...Buffet's has a stake in Berkshire Hathaway and will to that extent have a stake in BNSF...but that does not equate to Buffet owning BNSF.

Single person or entity ownership may not be a bad thing...after all..most businesses are owned by one person or a small partnership of individuals.  I am 100% owner of a business and from my vantage point that's not a bad thing. One owner...or a small group of owners.. can make decisions much more rapidly than a public company with investors who often need to be consulted on major decisions. This means that a smaller business can often turn on a dime and can run laps around a large company where decisions can take months to make.  BNSF may enjoy the benefits of a small concentrated ownership that is capable and can make decisions quickly. Your example of Childrens' Investment Fund isa good one and really illustrates what can go wrong when ownership and management interests aren't aligned. I don't think that will be a problem with Buffet at the helm.

Two aspects of this are worth noting - though they're somewhat related, because all of the ownership interests are held by the same entity, here Berkshire Hathaway / Buffett:

1. The eternal struggle/ tradeoff between long-term gain and short-term profits will be easier to resolve, because Berkshire/ Buffett doesn't have to consider/ look out for/ worry about any other BNSF shareholder's view.  Stated another way - he'll get whatever he decides, and has no one else to blame - and no one else can or will blame him for any the effect of any decision, or how it turns out.  It all comes out of/ goes into his wallet, and no one else's, so he's the best guy to decide what's best for it.

2.  In any other decision involving risk and prudence - such as an expansion, traffic, merger, share 'buy-back', political, economic, or environmental positions, Berkshire/ Buffett won't have to worry about being sued for trampling on or failure to properly perform his fiduciary duties to his fellow minority share-holders - because there simply aren't any.  It doesn't give him free rein to loot the company - but he can take risks that a corporate management might not otherwise because it wouldn't affect all stockholders equally, or that might result in serious losses.  Said differently, all of the risk/reward costs, benefits, contingencies, etc. will centralized and consolidated with Berkshire/ Buffett, who can then arrive at an optimum trade-off and balance among them, without having to consider the effects of a possible exposure to external liability, and the 'CYA' mentality such as over-design and other forms of excessive conservatism that often occurs as a result.  (There must be a formal name or description of this tendency, but I don't know what it is - at least not this late tonight.)

- Paul North.

My point was, if Bill Gates, as an individual buys up NS, then decides to sell it, as a privately owned company(owned by Bill Gates, not MSN) there needs to be no approval by the STB to okay the sale.  A privately owned company can be bought and sold on a whim.  As a merger or acquistion by another rr, investigation is conducted by the STB to insure competion fairness, and give all concerned companies/individuals/etc the right to air those concerns pubically, and to okay or deny the sale/merger/acquistion upon those concerns.  Read your business law texts.  R. Staller

rstaller:

I don't like the idea of Buffet owning BNSF entirely.  Look at the trouble CSX has had with their investor, Children's Fund or whatever it's called.  Diverse ownership keeps corporate raiders from raping companies and walking.  I would hope BNSF employees wise up quickly and start taking any legal steps needed to protect their interests in the company.  Also if Bill Gates, decides to buy, oh lest say for the sake of argument, NS, then decides to sell it to Buffet, no permission is needed from the goverment, as it is not a merger, but a privately company being sold by one individual to another. WISE UP PEOPLE.  R. Staller

Acquisition of control of two or more railroads by one person or entity is prohibited without the prior approval and authorization of the Surface Transportation Board.  See Public Law 104-88, 11323.  Privately held companies (as opposed to publicly listed and traded companies) are not exempt.  You can buy the first one without STB approval, but not the second.

RWM

Well, you were off only $10 billion; " The valuation of BNSF Railway NYSE:  BNI) was $34 billion on 02 Nov 2009.  Berkshire Hathaway already owned about 22% of BNI, making the deal $26.3 billion for the un-owned shares.  Not enough to bail out Newark, or Detroit, or Chicago, but a lot of money, in my book.

Hays

WRONG!!!!!!!!!!  If both companies are no longer publically traded, but privately owned, no okay by the STB is needed.  Privately owned companies,( not stocked traded publically) are not subject to the same sales laws.  Once the companies are removed from the stock exchange they are not open to public scrutiny, that's why privately owned companies do not have to publically report earnings, except to the IRS for taxing purposes.  Go to a person who owns a company, and demand to see his books, and he has every right, and is protected by commerce law, and basically can tell you to go pound salt.  R. Staller

rstaller:

WRONG!!!!!!!!!!  If both companies are no longer publically traded, but privately owned, no okay by the STB is needed.  Privately owned companies,( not stocked traded publically) are not subject to the same sales laws.  Once the companies are removed from the stock exchange they are not open to public scrutiny, that's why privately owned companies do not have to publically report earnings, except to the IRS for taxing purposes.  Go to a person who owns a company, and demand to see his books, and he has every right, and is protected by commerce law, and basically can tell you to go pound salt.  R. Staller

I don't know about other companies, but I do know a little about the jurisdiction of the STB.  Here's the relevant section of Public Law 104-88, the ICC Termination Act of 1995:

‘‘§ 11323. Consolidation, merger, and acquisition of control
‘‘(a) The following transactions involving rail carriers providing
transportation subject to the jurisdiction of the Board under this
part may be carried out only with the approval and authorization
of the Board:
‘‘(1) Consolidation or merger of the properties or franchises
of at least 2 rail carriers into one corporation for the ownership,
management, and operation of the previously separately owned
properties.
‘‘(2) A purchase, lease, or contract to operate property of
another rail carrier by any number of rail carriers.
‘‘(3) Acquisition of control of a rail carrier by any number
of rail carriers.
‘‘(4) Acquisition of control of at least 2 rail carriers by
a person that is not a rail carrier.
‘‘(5) Acquisition of control of a rail carrier by a person
that is not a rail carrier but that controls any number of
rail carriers.
‘‘(6) Acquisition by a rail carrier of trackage rights over,
or joint ownership in or joint use of, a railroad line (and
terminals incidental to it) owned or operated by another rail
carrier.
‘‘(b) A person may carry out a transaction referred to in subsection
(a) of this section or participate in achieving the control
or management, including the power to exercise control or management,
in a common interest of more than one of those rail carriers,
regardless of how that result is reached, only with the approval
and authorization of the Board under this subchapter. In addition
to other transactions, each of the following transactions are considered
achievements of control or management:
‘‘(1) A transaction by a rail carrier that has the effect
of putting that rail carrier and person affiliated with it, taken
together, in control of another rail carrier.
‘‘(2) A transaction by a person affiliated with a rail carrier
that has the effect of putting that rail carrier and persons
affiliated with it, taken together, in control of another rail
carrier.
‘‘(3) A transaction by at least 2 persons acting together
(one of whom is a rail carrier or is affiliated with a rail carrier)
that has the effect of putting those persons and rail carriers
and persons affiliated with any of them, or with any of those
affiliated rail carriers, taken together, in control of another
rail carrier.
‘‘(c) A person is affiliated with a rail carrier under this subchapter
if, because of the relationship between that person and
a rail carrier, it is reasonable to believe that the affairs of another
rail carrier, control of which may be acquired by that person,
will be managed in the interest of the other rail carrier.

RWM

BNSFwatcher:

Well, you were off only $10 billion; "  The valuation of BNSF Railway NYSE:  BNI) was $34 billion on 02 Nov 2009.  Berkshire Hathaway already owned about 22% of BNI, making the deal $26.3 billion for the un-owned shares.  Not enough to bail out Newark, or Detroit, or Chicago, but a lot of money, in my book.

Hays

Most financial sources put the value of the deal at $44 billion, not $26.3 billion, as BH also assumed $10 billion in debt and already held $8 billion in stock, so, in effect, BH is on the hook for $44 billion.

See, for example, 

http://dealbook.blogs.nytimes.com/2009/11/03/berkshire-to-buy-rest-of-burlington-northern-for-44-billion/

http://www.joc.com/node/414432

http://www.streetinsider.com/Mergers+and+Acquisitions/Buffett+Takes+A+Ride+On+the+Burlington+Northern+%28BNI%29+Railroad,+Announces+$44+Billion+Takeover/5068609.html

RWM

rstaller:

WRONG!!!!!!!!!!  If both companies are no longer publically traded, but privately owned, no okay by the STB is needed.  Privately owned companies,( not stocked traded publically) are not subject to the same sales laws.  Once the companies are removed from the stock exchange they are not open to public scrutiny, that's why privately owned companies do not have to publically report earnings, except to the IRS for taxing purposes.  Go to a person who owns a company, and demand to see his books, and he has every right, and is protected by commerce law, and basically can tell you to go pound salt.  R. Staller

A private company is not open to AS MUCH public scrutiny perhaps...however any business regardless of ownership is a social organ and is thus open to some scrutiny by others. For example, my own business is 100% private...however the law allows that a supplier may request to see my books in  certain cases. The law also allows safety and environmental audits..employment audits..around here my workforce needs to reflect the cultural diversity of the population at large..if it does not then I've got a big problem even though my business is privately held. Also, if I want to do business with a bank or maybe some of the larger name brand customers then once again I will need to be free to open my books...some big accounts require full disclosure..they want to know who my customers are..what I'm charging them..who my suppliers are..all in some detail. Private ownership is a good thing..don't get me wrong...but from a practical standpoint it makes no sense to play it too close to the vest.