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$44B Transaction Gives Berkshire Hathaway Sole Ownership of BNSF

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Posted by BNSFwatcher on Saturday, November 7, 2009 8:51 AM

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

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Posted by Railway Man on Friday, November 6, 2009 6:55 PM

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

 

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Posted by rstaller on Friday, November 6, 2009 1:09 PM

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

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Posted by Paul_D_North_Jr on Tuesday, November 3, 2009 10:10 PM

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.

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
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Posted by garr on Tuesday, November 3, 2009 9:35 PM

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

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Posted by richg1998 on Tuesday, November 3, 2009 8:41 PM

 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

If you ever fall over in public, pick yourself up and say “sorry it’s been a while since I inhabited a body.” And just walk away.

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Posted by Ulrich on Tuesday, November 3, 2009 7:14 PM

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.

 

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Posted by rstaller on Tuesday, November 3, 2009 5:57 PM

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

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Posted by Mookie on Tuesday, November 3, 2009 5:09 PM

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

She who has no signature! cinscocom-tmw

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Posted by Ulrich on Tuesday, November 3, 2009 4:22 PM

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.

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$44B Transaction Gives Berkshire Hathaway Sole Ownership of BNSF
Posted by wrawroacx on Tuesday, November 3, 2009 3:38 PM
Tom My Videos - http://www.youtube.com/user/MrWrawroacx

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