Warren Buffet loves the U.S.
NEW YORK (Reuters) - Warren Buffett’s Berkshire Hathaway Inc will pay $26 billion to buy out Burlington Northern Santa Fe Corp in a bet that the nation’s largest rail company is poised to benefit from a recovering U.S. economy.
The deal announced Tuesday, Buffett’s biggest-ever acquisition, also represents a bet on coal and new interest in a storied but highly cyclical American industry that has tried to reinvent itself by emphasizing its ability to move goods cheaply and efficiently.
The deal was priced at a premium of 31.5 percent over BNSF’s closing stock price on Monday and values the railroad at $34 billion, or 18 times estimated 2010 earnings. BNSF shares jumped 28 percent in afternoon trading; other U.S. and Canadian rail shares also rose.
“It’s an all-in wager on the economic future of the United States,” Buffett, who has been building up his rail holdings for several years, said in a statement. “I love these bets.”
Reversing his long-time opposition to share splits, which has resulted in Berkshire having the highest per-share prices of any shares on the New York Stock Exchange, Buffett agreed to a 50-for-1 split of Class B stock, which will make it much more accessible to retail investors.
The Class B shares trade at over $3,000, and the Class A shares at more than $100,000. The B shares were up about 2 percent and the A shares about 1.5 percent.
Buffett, one of the world’s richest men and one of its most revered investors, is known for making big long-term bets. In October 2008, soon after the collapse of Lehman Brothers set off worldwide selling, he wrote in The New York Times: “Fears regarding the long-term prosperity of the nation’s many sound companies make no sense.”
Berkshire would pay $100 per share in cash and stock for the 77.4 percent of BNSF shares it does not already own, and would also assume $10 billion of BNSF debt. It would pay about $16 billion in cash, of which $8 billion would be from its own funds and the rest from debt.
Berkshire could not do an all-stock deal because it would deplete its capital beyond what insurance regulators would allow, said Justin Fuller, an analyst at Midway Capital Research & Management in Chicago and author of the Buffettologist.com blog.
Berkshire’s biggest holdings include insurers like Geico, although it has close to 80 units with products ranging from carpeting to natural gas, ice cream, paint and underwear.
“They tend to accumulate capital faster than they know what to do with it, and this is a really good deal for them,” Fuller said. “It will create a lot of value for Berkshire.”
RECOVERING ECONOMY
The deal, expected to close in the first quarter of 2010, comes as the U.S. economy is beginning to recover from its worst downturn since World War Two. U.S. gross domestic product grew at a 3.5 percent annual rate in the third quarter, the first quarterly growth in more than a year.
BNSF, the No. 1 U.S. railroad by revenue, operates in the U.S. West and Midwest. It said in September that freight volumes were recovering and it was encouraged by an improvement in consumer-related markets.
“Berkshire is seeing way past some impending economic recovery signs now and looking into the future,” said Peter Boockvar, equity strategist at Miller Tabak + Co in New York. Continued…
NEW YORK (Reuters) - Warren Buffett’s Berkshire Hathaway Inc versera 26 milliards de dollars pour racheter la Burlington Northern Santa Fe Corp dans un pari que les plus grands de la nation entreprise ferroviaire est en passe de bénéficier d’une économie américaine en convalescence. L’accord annoncé mardi, le plus grand Buffett-acquisition jamais réalisée, représente aussi un pari sur le charbon et un nouvel intérêt dans une industrie américaine étagé mais très cycliques qui a tenté de se réinventer en insistant sur sa capacité à transporter des marchandises bon marché et efficace. L’opération a été au prix d’une prime de 31,5 pour cent sur le cours des actions de BNSF de clôture, le lundi et valeurs de la voie ferrée à 34 milliards de dollars, soit 18 fois le bénéfice estimé 2010. BNSF part bondi de 28 pour cent dans le commerce après-midi, d’autres actions américaines et canadiennes ferroviaire a également augmenté. «C’est un tout-en pari sur l’avenir économique des États-Unis”, Buffett, qui a été la constitution de sa Rail Holdings depuis plusieurs années, a déclaré dans un communiqué. «J’adore ces paris.” Inverser son opposition de longue date aux fractionnements d’actions, ce qui a entraîné dans le Berkshire ayant le plus haut prix à proportion de toutes les actions à la Bourse de New York, Buffett a convenu d’un 50-pour-1 scission des actions de classe B, qui fera beaucoup plus accessible aux petits investisseurs. Les actions de catégorie B du commerce à plus de 3000 $, et les actions de catégorie A à plus de 100.000 $. Les actions B ont augmenté d’environ 2 pour cent et les actions A environ 1,5 pour cent. Buffett, l’un des hommes les plus riches du monde et l’un des investisseurs les plus vénérés, est connu pour faire des paris à long terme de gros. En Octobre 2008, peu après l’effondrement de Lehman Brothers partit vendu au monde, il a écrit dans The New York Times: “Les craintes concernant la prospérité à long terme des entreprises de son De nombreux de la nation n’a pas de sens.” Berkshire devrait payer 100 $ par action en numéraire et en actions pour les 77,4 pour cent des actions de BNSF elle ne détient pas encore, et devrait également assumer 10 milliards de dollars de la dette BNSF. Il paierait environ 16 milliards de dollars en espèces, dont 8 milliards de dollars seraient à même ses fonds propres et le reste de la dette. Berkshire pourrait pas faire un deal-stock car elle épuiserait son capital au-delà de ce que la réglementation d’assurance permettrait, a déclaré Justin Fuller, analyste chez Midway Capital Research & Management à Chicago et auteur du blog Buffettologist.com. Plus grande participation de Berkshire compte les assureurs comme Geico, bien qu’il possède près de 80 unités avec des produits allant de la moquette au gaz naturel, de la crème glacée, de peinture et de sous-vêtements. «Ils ont tendance à accumuler le capital plus rapidement qu’elles ne savent quoi faire avec elle, et c’est vraiment une bonne affaire pour eux”, dit Fuller. «Cela va créer beaucoup de valeur pour Berkshire.” RECUPERATION DE L’ÉCONOMIE L’opération, qui devrait être conclue au premier trimestre de 2010, intervient alors que l’économie américaine commence à se remettre de sa pire récession depuis la Seconde Guerre mondiale. Produit intérieur brut américain a progressé à un taux annuel de 3,5 pour cent au troisième trimestre, la croissance trimestrielle en plus d’un an. BNSF, le n ° 1 du chemin de fer des Etats-Unis par des recettes, est présent dans l’Ouest américain et le Midwest. Il a indiqué dans Septembre que les volumes de fret ont été les récupérer et il a été encouragé par une amélioration des marchés liés à la consommation. “Berkshire voit ainsi passé, certains signes de reprise économique imminente maintenant et regarder vers l’avenir”, a déclaré Peter Boockvar, stratège actions chez Miller Tabak + Co à New York. Continued …
When you go to work for an employer, you expect that they know what they are doing. But do they? My husband recently lost his job working in a manufacturing company. He was actually fired for poor job performance. When he came home the day he lost his job and showed me the paperwork they gave him, I almost choked on my coffee.
They had several lines of reasons why they fired him. They said it was poor job performance, along with extra duties that don’t even come close to the job description. They charged him with not doing his job well, in a situation where he wasn’t involved until after all decisions on specs and requirements were made, by someone else. He was blamed for crashes and other things that he had made numerous, unanswered requests for prints on.
What was the real reason behind the firing? Was it really his job performance? Or was it yet another example of irresponsibility on the part of the owners? If they had spent more time being involved in their still new business or caring about the details, would they have still been pushed in a corner to get rid of people? Of course Colorado is a “Right To Work” State, which means you can get canned for looking the wrong way and just be screwed.
The pattern of THEIR job performance, over the course of his employment, shows that they are responsible for the need to eliminate employees. Extravagant lifestyles, an obvious interjection of alcohol related behavior, decision making that at best was intermittent, running in the socialite world and extreme lack of knowledge in the field they were attempting, all a recipe for disaster.
The entire time he worked for them, whatever new trend came their way, they jumped aboard. No solid decision making whatsoever. Allowing old timers that were not doing their jobs, to run major parts of the business. Relying on the people who had kissed up, to be in charge. They fired 3 people the day my husband lost his job. All in his dept., all for poor job performance.
None of these guys would just go along to get along. The people left, have done that consistently. They choose to kiss butt to keep a job, but always are walking on eggshells.
The people fired were threatened to lose their jobs on a regular basis and intimidated into doing non work activities, such as going along with the owner after he had been drinking in an automobile, he insisted on driving. Is that responsible, business ownership?
This wasn’t the first time. The last year has seen many firings. Some justified, most not.
If you have lost your job recently, whether laid off or fired, do you know the truth behind the dismissal?
In this economy, businesses across the country are struggling to keep their heads above water. Many are legitimately struggling. Others are struggling because of poor management and unwise use of their money.
Should businesses be held responsible when they blatantly misuse and abuse their powers and their authority? How hard should someone push to make them responsible? We have seen company after company, either laying off workers or closing their doors. They are filing bankruptcy, begging for bailout money and grasping for any help out there.
Should there be a standard of operation in owning your business that ensures employees are not the ones that lose, when you don’t do YOUR job to operate your business in the most profitable manner?
Should business owners, in their quest to buy a business, be required in the loan process, to qualify in the operation of that business? If they lose, because of lack of knowledge or bad management practices, then have to file bankruptcy or close a business, who else is in line to lose? Everyone…..
You can’t operate a manufacturing company like a Chicago, big business office. If you don’t have the experience and knowledge, no matter the piece of paper on the wall, how do you run it correctly? Blue Collar is not White Collar. The people are different. They work hard and they expect their Supervision to know what they are doing. They rely on that.
When that doesn’t happen, good, honest people are affected. When they see you taking expensive, Argentinean vacations, but the bonus was cut, it isn’t kosher. When there is extreme waste and abuse in the work place that goes unchecked or ignored, then affects their paycheck, they get upset.
The Blue Collar Worker has been a trusting breed for years. They get up every morning, earlier than the rest of the world and do the labor intensive and dirty jobs of this country.
Yet, everyday the greedy business owners are trying to cut the throat of the Blue Collar Workers. The manufacturing has gone out the door in America, for the sake of somebody trying to get rich.They want to pay workers in America crappy wages, but they want to take home a wheelbarrow full of gold.
Yea, the owners are living it up. But, poor quality products are coming to America. Defective materials, dangerous materials and oh sure a cheap price, but at what price? Is the damage worth the supposedly, cheap cost? In businesses in this country, whose owners are not participating or who cut costs in the extreme, poor quality is happening as well.
Now, millions of Americans are out of work. How many are Blue Collar? How many lost their jobs for the same reasons the company my husband worked for has fired people? Lack of responsibility?
Should businesses be held more responsible in this era of failings across the country? Should failing businesses that have acted irresponsibly, have to show and tell before getting more money to run their business badly again? Should they have to show how they manage people and treat their employees?
If we don’t change how we do business in this country, individually and as a whole, and consider more than making a dollar, America will cease to be a GREAT Country and will shrink to the status of SAD. People should feel confident in the Employers they work for, not scared each day they go in the door in an effort to take care of their lives and their families.
