Berkshire Hathaway to sell Union Pacific and Norfolk Southern shares

Posted Monday, Nov. 09, 2009 Comments   (0) Print Share Share Reprints
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By JOSH FUNK

The Associated Press

OMAHA, Neb. — Warren Buffett’s company will sell its stakes in Union Pacific and Norfolk Southern railroads before it completes its $26.3 billion acquisition of Fort Worth-based BNSF Corp.

Berkshire Hathaway’s plan to sell those stocks was revealed in documents filed Monday with the Securities and Exchange Commission.

According to a transcript of a conference call, BNSF CEO Matt Rose told employees of his railroad that Berkshire plans to sell its 9.6 million shares of Union Pacific Corp. and 1.9 million shares of Norfolk Southern Corp. Berkshire’s holdings represent 2 percent of Union Pacific and less than 1 percent of Norfolk Southern.

Berkshire officials did not immediately respond to questions Monday. They do not typically comment on the company’s stock holdings.

Berkshire last provided an update on its U.S. stock holdings in August, when it listed its holdings as of the end of June. A third-quarter update is expected this month.

Buffett said last week that the BNSF deal is essentially a wager on the U.S. economy because railroad profits tend to grow along with the nation’s economy. The railroads carry raw materials and finished products for a number of industries as well as delivering coal to utilities.

Buffett has said he realized a few years late that railroads are an appealing investment. As diesel prices rise, shipping by rail instead of truck becomes more attractive, and it would be extremely difficult for a competitor to build a railroad.

Monday’s disclosure confirms that Buffett has chosen to let his rail wager ride exclusively on BNSF, the nation’s second-largest railroad.

Berkshire already owns 22.6 percent of BNSF’s stock, and on Nov. 3 it announced a plan to acquire the rest for $100 per share in cash and stock.

The acquisition of BNSF would be the biggest ever for Buffett’s holding company. Berkshire’s biggest previous acquisition was the $16 billion stock purchase of reinsurance giant General Re, announced in 1998.

The deal requires approval from Burlington shareholders and antitrust regulators, and is set to close early next year.

Berkshire owns roughly 70 subsidiaries, including furniture, insurance, jewelry and candy companies, restaurants, natural gas and corporate jet firms. Berkshire employs more than 240,000 people and has major investments in such companies as American Express Co., Coca-Cola Co. and Wells Fargo & Co.

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