(The following story by Andrea Ahles appeared on the Fort Worth Star-Telegram website on December 31, 2009.)
FORT WORTH, Texas — When Berkshire Hathaway announced Nov. 3 that it would buy Fort Worth-based Burlington Northern Santa Fe for $26 billion, it became clear that the first conversations about the deal took place during Berkshire Chief Executive Warren Buffett’s stay at a downtown Fort Worth boutique hotel 12 days earlier.
That Oct. 22 gathering at The Ashton was ostensibly for a meeting of the Berkshire Hathaway board, attended by Buffett, Microsoft founder Bill Gates and other company directors.
But a government filing made late last week discloses the details of just how quickly the world’s second-richest man put together the deal to acquire the 77.4 percent of BNSF that Berkshire didn’t already own.
The BNSF filing, which included voting instructions for BNSF shareholders who still must approve the deal at a Feb. 11 meeting in Fort Worth, also states that if the merger is not completed by June 30, either party can walk away.
On Dec. 7, the Federal Trade Commission said it found no antitrust issues, clearing the way for the acquisition to be completed in the spring.
Here’s a timeline, as recounted in the Securities and Exchange Commission filing:
Oct. 22 — Buffett meets with BNSF Chief Executive Matthew Rose and other BNSF executives before the Berkshire board meeting. At the meeting, the railroad’s “business and financial performance” is discussed.
Oct. 23 — Buffett and Rose meet in the evening. Buffett says that if the BNSF board is “receptive,” Berkshire will buy all outstanding shares for $100 each. Berkshire already owns about 22 percent of the railroad. Buffett also details the financing of the deal: 40 percent in Berkshire common stock and 60 percent in cash, including an $8 billion loan.
Oct. 24 — Rose calls lead BNSF director Ed Whitacre to inform him of Buffett’s interest. Whitacre advises him to retain financial and legal advisers for BNSF.
Oct. 26 — A special board meeting is held via conference call to review the details of the potential purchase. Rose tells the board he has contacted Goldman Sachs and Evercore Partners as financial advisers. During the meeting, advisers inform the board that the “current state of the financial markets and BNSF’s market capitalization would make a superior proposal by a private-equity buyer unlikely.” The regulatory analysis also notes that Berkshire holds investments in at least two other rail carriers.
Oct. 27 — Rose calls Buffett to tell him that the board met the day before and is “still considering the matter.” He asks Buffett about Berkshire’s other rail investments. Buffett replies that he is willing to sell all Berkshire’s shares in other railroads.
Oct. 28 — The BNSF board holds another telephone conference and considers contacting other potential acquirers. After “extensive discussion,” the board authorizes Rose to enter negotiations with Berkshire. Later that day, Rose calls Buffett and asks whether he would increase the offer above the $100 per share. Buffett tells Rose that the offer is at the very top of the range he is willing to pay.
Oct. 29 — A draft merger agreement is circulated between the companies.
Oct. 30 — BNSF and Berkshire execute a confidentiality agreement and begin negotiating terms of the merger.
Oct. 31 — The Compensation and Development Committee of the BNSF board holds a special meeting via telephone to discuss how the transaction will affect employee benefit plans.
Nov. 2 — The BNSF board holds a special meeting in Detroit to review and discuss the merger. “After engaging in extensive discussion, the BNSF board unanimously approved the merger agreement as being in the best interests of BNSF and its stockholders.”
Nov. 3 — The companies announce that Berkshire will buy the outstanding shares of BNSF for $26.3 billion.