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BNSF gives Berkshire even bigger Fort Worth presence
Now if only Warren Buffett could fix the job market, too
BNSF headquarters has been huge asset for Fort Worth
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Legendary investor Warren Buffett came to Fort Worth just 13 days ago, on Oct. 22, ostensibly just for a meeting of the board of directors of his Berkshire Hathaway holding company.
Forty-eight hours later, Buffett left town with fond memories of a good chicken-fried steak and an agreement to spend $26.3 billion to buy Burlington Northern Santa Fe Corp. "I think every little boy in America grows up fantasizing about running a railroad. Now I’m going to own one," Buffett said in an interview Tuesday after the deal to buy the Fort Worth-based company was announced.The proposed deal, which still must be approved by BNSF stockholders and government regulators, would be the biggest ever for Buffett. Known as the Oracle of Omaha for his sage investing advice, Buffett is the world’s second-richest man, according to Forbes magazine. In March, even though the value of Buffett’s portfolio of businesses had been battered by the severe economic downturn, Forbes estimated he was worth $37 billion.BNSF will be the fourth Fort Worth company Buffett owns. He bought Justin Industries and its Acme Brick subsidiary for $600 million in June 2000, and later spun Acme off into a separate entity. In December 2006, Berkshire Hathaway purchased the privately held electronics parts distributor TTI for $1 billion.Berkshire Hathaway already owned $10 billion worth, or 22.6 percent, of BNSF. Buffett began acquiring the railroad’s stock in 2006. With the assumption of $10 billion in BNSF debt, Buffett’s total stake in the company totals about $44 billion.Both Buffett and BNSF Chief Executive Matthew Rose said the sale will have little effect on the way the railroad runs its operations or on its community profile in Fort Worth."Warren told me, 'Matt, I want you and your team to run this business like a 100-year family business and try to make it better every day,’ " Rose said.Buffett described his decision to acquire BNSF as "an all-in bet" on the railroad "and the economic future of the United States.""It’s an absolutely essential business that will prosper as America prospers," Buffett said. "Matt Rose and his team have done a wonderful job of running that company. They’re an extremely well-run railroad. We wouldn’t be buying it otherwise. I don’t know how to run a railroad."Stanley Block, professor of finance at TCU’s Neeley School of Business, said there’s no reason to doubt Buffett."This is the largest acquisition Warren Buffett has ever made, and he would not have made it if he did not think that the right management team is already in place," Block said. "As a finance professor, I would say that 20-25 percent of the purchase price . . . was to pay for the strong management group."Buffett’s decision came down very quickly, as others before it have. He came to Fort Worth early on the 22nd, ahead of the board meeting, went out to BNSF’s headquarters in far north Fort Worth, and met with Rose and other senior staff.
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