(The Associated Press circulated the following story by Samantha Bomkamp on February 12, 2010.)
NEW YORK — BNSF Railway shareholders have approved the railroad’s sale to Warren Buffett’s Berkshire Hathaway, paving the way for the Oracle of Omaha to complete his biggest acquisition yet.
The $26.3 billion purchase of the nation’s second-largest railroad is expected to officially close today.
Berkshire Hathaway, based in Omaha, Neb., agreed last fall to pay $100 per share in cash and stock for the 77.4 percent of BNSF shares that it didn’t already own.
Matthew Rose, BNSF’s chief executive officer, said 70 percent of shares cast that Berkshire didn’t already own voted in favor of the deal. The acquisition needed two-thirds approval to pass.
“Tomorrow begins the first century of ownership of BNSF by Berkshire Hathaway,” Buffett said in a statement. “I’m looking forward to every day of it as our railroad does its part to ensure the future prosperity of the country.”
Prior to this agreement, Berkshire’s biggest acquisition was the $16 billion stock purchase of reinsurance giant General Re in 1998.
When he announced the BNSF deal, Buffett called it an “all-in wager” on the U.S. economy, since freight railroads carry many items consumers use every day. Everything from toys and cars to lumber for homes and coal for electricity rolls on the rails. BNSF, which is based in Fort Worth, Texas, ships enough coal to power one of every 10 homes in the United States.
BNSF Railway is the only rail service on Montana’s Hi-Line and the main transportation to ship the state’s grain crops to export markets on the West Coast.
Lola Raska, executive vice president of the Montana Grain Growers Association, said she hasn’t heard much talk about the deal lately from farmers.
“We feel that one of the things they (Berkshire Hathaway) purchased was the management team (of BNSF) and there don’t seem to be plans to change that,” Raska said. “That’s who we’ve built relationships with and who we are comfortable going forward with.”
But Montana Farmers Union legislative affairs and special project cirector Chris Christiaens said he has heard rumblings about concern that the sale might prompt rate increases.
“Since they paid more than $13 million over the value of the stock, a lot of people are waiting to see how they will recoup that,” he said. “Because we in Montana are captive shippers, we just don’t know what will be happening a year or two down the road.”
In an interview with The Associated Press, Rose said a recent increase in shipments indicates the economy is stabilizing, but sustainable growth still appears a long way off.
Although recent storms on the East Coast have bumped up demand for coal to generate electricity, the outlook in other segments — especially those tied to consumer spending — still is mediocre at best.
“The story is better than last year,” Rose said. “But not great at all.”