Buffett Watch

BNSF CEO: Buffett's Bid for Railroad "Warmly Received" In Washington

Burlington Northern Santa Fe CEO Matt Rose says the railroad's proposed acquisition by Berkshire Hathaway is being "very warmly received" by Washington policy makers.

Rose makes the comment in a voice message to BNSF employees posted today on the company's intranet.  A transcription has been filed with the SEC.

In the message, Rose says he went to Washington yesterday to meet with "many of our public policy makers, Department of Transportation, many of the Senators and House Members who are involved in transportation policy."

He draws a sharp distinction with his experience during the failed merger attempt in 1999-2000 between BNSF and the Canadian National:

"All I can tell you is, 'Wow, what a difference it makes.' This transaction is really being very warmly received. And the reason is exactly what we told all of our employees on Tuesday, and that is that Berkshire has a tremendous track record of buying well-run, well-maintained companies and leaving them alone in order for them to fulfill their mission. And it also helps to have, as I described it on Tuesday, probably the most significant business icon, Warren Buffett, leading this effort."

That apparent lack of opposition in DC should be good news for arbitrageurs buying Burlington Northern now for around $97 in order to get the $100/share price Berkshire will pay when/if the deal closes in the first quarter of next year as planned.  Bloomberg notes that would give arbitrage traders an annualized return of 8 to 22 percent.

It quotes the Mutual Global Discovery Fund's Anne Gudefin as saying, "It’s a good opportunity to put some cash to work and at the end to get some Berkshire shares as part of the transaction."

Remember, however, there is risk involved.  The deal could fall apart for any number of reasons, aside from opposition by Washington policy makers.

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