The biggest name in investing is making what he calls an “all-in wager” on the U.S. economy – $34 billion to own a railroad.
The acquisition of Burlington Northern Santa Fe, the nation’s second-largest railroad, would be the biggest ever for Warren Buffett’s Berkshire Hathaway investment company.
It’s a natural fit for the Oracle of Omaha, a Nebraska city with a special place in railroad history. It was the starting point for the westward push of the transcontinental railroad and is the headquarters of Union Pacific, and Burlington Northern trains rumble through every day.
In a statement, Buffett, whose investing decisions are carefully scrutinized by the world of finance, voiced confidence in the railroad industry.
“Most important of all, however, it’s an all-in wager on the economic future of the United States. I love these bets,” he said Tuesday.
Berkshire Hathaway already owns a 22 percent stake in Burlington Northern and would buy up the rest under the deal, for a total value of $34 billion. It still needs approval from Burlington shareholders and antitrust regulators, both expected early next year.
Burlington Northern is the biggest hauler of corn and coal for electricity, making it an indicator of the country’s health. It also carries everyday items such as refrigerators, clothing and TVs from Western ports Los Angeles and Seattle.
Berkshire will pay $100 a share in cash and stock for the rest of the company.
Buffett has said he realized a few years late that railroads were 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 new railroad.
