Railroad Forums
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Leo_Ames wrote:I'm ashamed to ask this since I have my MBA. But how can a company buy 100% of the stock of another? What if a shareholder didn't want to sell? I presume there's a process where they can be forced to sell?From the FAQ at http://www.bnsf.com/investors/presentat ... ecial.html shareholders either receive cash or Berkshire Hathaway stock. The same thing happens when two companies merge, except there's probably not usually a cash option.
I'm glad I don't work for the company. The more I've learned about the Warren Buffet, the less I'm impressed. But I guess this isn't the time or place to go into that.
Hope it works out the best for BNSF's employees and the industry as a whole.
trainwayne1 wrote:Perhaps one of the members on here with a working knowledge of government regulations can tell us if/how much of a finacial interest a railroad may have in another railroad? The Lackawanna, before merging with the Erie, had a sizeable investment in the Nickle Plate, since it was one of it's biggest interchange partners, and the PRR had a big chunk of the LV in pre-PC days. Have the laws changed?I believe more than 50% - in other words true control - requires ICC/STB approval. This only applies when more than one railroad is involved; in other words, this transaction doesn't require STB approval, but if Berkshire Hathaway were to then buy control of NS the STB would get involved. Similarly, if BNSF were to buy control of NS prior to this transaction, that would require approval but the Berkshire Hathaway purchase would not, since no relationships between railroads would change - BNSF would control NS before and after.
joshuahouse wrote: Most of the news stories I saw today didn't manage to use the full Burlington Northern Santa Fe name beyond the first paragraph."Burlington Northern" is an abbreviated name for Burlington Northern Santa Fe. In the same way that "Santa Fe" was an abbreviated name for Atchison, Topeka, and Santa Fe, back when the ATSF existed.
joshuahouse wrote:Most of the news stories I saw today didn't manage to use the full Burlington Northern Santa Fe name beyond the first paragraph.I've done quite a lot of business writing and can say it's more or less the convention to only use the full name of a company once in the first sentence, then use a shorter form or ticker symbol from then on-- International Business Machines first, then IBM, for instance, or Ford Motor Company then Ford.
Leo_Ames wrote:I'm ashamed to ask this since I have my MBA. But how can a company buy 100% of the stock of another? What if a shareholder didn't want to sell? I presume there's a process where they can be forced to sell?They would want to sell. The investors will get a hundred dollar share in Berkshire Hathaway for each BNI share they own. Or they will be compensated in cash. The deal is virtually through, but the investors still have to vote. If they do not vote, their share will be void nd sold to Buffet. But it is forseen that there will be no opposition. It shows the reemergence of the railroads if Buffet plays now such a major role. Before this buyout, he owned slightly over 20% of BNI stock.
Gilbert B Norman wrote:disclaimer: author holds position in BNI...though not for long, if Mr. Buffett has his way.
Sarge wrote:I would imagine if BH has an interest in NS, Buffett will have to divest it when they acquire BNSF.Probably not, since it's not a direct competitor in any market (well, Memphis-Birmingham, maybe), and Buffett doesn't have an interest sufficient to plausibly encourage NS to avoid exchanging traffic with BNSF's competitors.
Leo_Ames wrote:I'm ashamed to ask this since I have my MBA. But how can a company buy 100% of the stock of another?Usually it's called a "tender offer".
What if a shareholder didn't want to sell? I presume there's a process where they can be forced to sell?Yes. If sufficient of the company's shareholders vote to sell, they can force the minority to sell out. In this case it appears that shareholders representing 2/3 of the shares of BNSF not held by Berkshire have to vote in favor of the merger, in order to force the rest to sell.