Buffett buys Burlington Northern

Warren Buffett’s Berkshire Hathaway is buying Burlington Northern Santa Fe. Describing it as an “all-in wager on the economic future of the United States,” Buffett is offering a cash-and-stock deal of $100 per share totaling $44 billion for the 77.4 percent of the railroad company he doesn’t already own. He also gets $10 billion of Burlington Northern debt. The deal is the largest acquisition in Berkshire Hathaway’s history. No management changes are expected. Pending government approval, the deal is expected to be completed in early 2010.

Bloomberg reports, “At $100 a share, Buffett is paying 18.2 times Burlington Northern’s estimated 2010 earnings of $5.51.” Buffett has stated he expects trains to become more competitive with trucks for hauling freight at fuel becomes more expensive.