Berkshire to buy BNSF

neroden wrote: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.

As I read about what would happen it said according to Delaware law, 66.6% of stockholders are needed to vote in approval.

taoyue wrote: Berkshire owns stock in Union Pacific and Norfolk Southern, but not a controlling interest.

OK but what about the 100% of Railserve that B-H owns as part of the Marmon Group?

Rail serve ? Obviously not a Class I.

n2cbo wrote:OK but what about the 100% of Railserve that B-H owns as part of the Marmon Group?

That's an interesting question -- and Marmon also owns Union Tank Car.

From what I know of competition law, neither is going to be a serious problem. There is no incentive for Railserve to deny its in-plant switching services to companies using a different class I than BNSF, and there is no incentive for BNSF to browbeat companies to use Railserve. Similarly, there is no incentive for Union Tank Car to stop selling to companies other than BNSF.

There *might* be some incentive for BNSF to buy preferentially from Union Tank Car, so we might see a condition on the deal requiring BNSF to subject its leasing, purchase, and maintenance of tank cars (and other rail vehicle products manufactured by Marmon) to competitive bidding. Given Buffett's method of conglomerate operations (encouraging each company to operate independently), I expect this would be agreed to without a blink.

NE2 wrote:

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.

Right. As an important point, this is independent of antitrust review under the general (non-railroad-specific) laws against monopolies, which must be satisfied separately.

While the Wall Street Journal's site is subscription, sometimes Feature material is available as free content. If such be the case, enjoy. Otherwise, perhaps there could be a "thanks boss' moment come Monday:

http://online.wsj.com/article/SB1000142 ... 31980.html

neroden wrote:There *might* be some incentive for BNSF to buy preferentially from Union Tank Car, so we might see a condition on the deal requiring BNSF to subject its leasing, purchase, and maintenance of tank cars (and other rail vehicle products manufactured by Marmon) to competitive bidding. Given Buffett's method of conglomerate operations (encouraging each company to operate independently), I expect this would be agreed to without a blink.

As an employee of another BKH wholly-owned company, we receive periodic trainings/updates/notices/e-mails that clarify that we are not to enter into business with another BKH subsidiary OR AFFILIATE (where BKH owns more than 10% of the company, so BNSF has been on the list for some time) without legal review, to ensure compliance with all of the various anti-trust and SOX laws.

Not that I have any purchasing/procurement responsibilities, but it's just another regulatory thing I have to be on the lookout for. My only contacts with BNSF (or any other railroad - UP included) are to assist the signaling department (since if they don't buy power from us, they make it themselves) within my company's service territory.

Interesting article on the BNSF purchase in today's NY Times:

http://www.nytimes.com/2009/11/08/weeki ... barry.html

Awesome Train Set, Mr. Buffett
By DAN BARRY
Published: November 7, 2009

For $50 or so, you can buy a Thomas the Tank Engine train set and feel as powerful as Sir Topham Hatt, the somewhat wooden overseer of the mythical North Western Railway Company. Or, if you are the investor Warren E. Buffett, you can purchase the complete set of the Burlington Northern Santa Fe Corporation, for $26 billion or so.

[Always include a quote of stories you link to! - omv]

Wall Street Journal today reports that Berkshire (Warren's holding company) will divest its interests in both Norfolk Southern and Union Pacific. Why this is being done is not made clear by the article, however it could be to eliminate any possible regulatory issues or it could be to minimize overweighting the portfolio with railroad holdings.

While Warren usually is, he is not always 100% right (USAir, GenRe; that he avoided technology holdings is open to debate).

http://online.wsj.com/article/SB125780284370839503.html

BY JOSEPH CHECKLER
The chief executive of Burlington Northern Santa Fe Corp. said Warren Buffett's Berkshire Hathaway Inc. is liquidating its stakes in rival railroad companies Norfolk Southern Corp. and Union Pacific Corp., as Berkshire prepares to close its purchase of Burlington Northern.

(BTW "gottaluv" the photo caption in the article)

Recalling some of the pitiful attempts at railroad-related coverage cited by DPM back in the dark days of the 1970's, I have to observe that the industry, the people who follow it, and the better-informed among the journalistic profession have all come a long way.

I'm just wondering, but how does Berkshire Hathaway go about owning all these companines. In US History as well as Economics 101 you always here about "the Trust Buster." Looking at the list of Berkshire holdings on wikipedia

http://en.wikipedia.org/wiki/List_of_as ... e_Hathaway

It seems that he owns many competing companies, how is this all legal?

I don't see any obvious competitors there, just companies that are in similar fields.

You can own non-controlling stakes in just about as many companies in one field as you want.

As for the companies that BH owns controlling stakes in, note that the ones that are in similar industries, none have a particularly large market share. No one cares if you own five different companies in the same sector if they together make up, say, only 5% market share.

Ah, so its dependent on marketshare. That makes sense, thanks for the answer.

No one cares if you own five different companies in the same sector if they together make up, say, only 5% market share.

Not exactly accurate (not railroad related)
http://www.baltimoresun.com/business/ba ... 592.column

Between them Frito-Lay and Kraft control well over half of the U.S. snack market. Frito-Lay makes the eponymous chips and other junk food. Kraft makes Ritz and Triscuit crackers and Mister Salty pretzels.

Snyder's market share, by contrast, is about 2 percent. Utz's is even less.

I wish we could just dump the FTC.