Buffett's Stakes In Other Railroads Not Problematic -Experts
By Josh Mitchell, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Berkshire Hathaway Inc. (BRKA, BRKB) will likely be
able to keep small stakes in two other freight-railroad operators in its bid to
buy all of Burlington Northern Santa Fe Corp. (BNI), two former U.S. Justice
Department officials said Wednesday.
Warren Buffett's firm already has shares in three of the nation's four major
freight railroads. The deal announced this week would give the company full
ownership of Burlington Northern, of which it currently owns about 23%,
alongside Berkshire's existing small stakes in Union Pacific Corp. (UNP) and
Norfolk Southern Corp. (NSC).
Berkshire Hathaway doesn't appear to hold shares in CSX Corp. (CSX).
The Justice Department plans to review the deal, said a department
spokeswoman, adding that officials were trying to determine the exact review
process the deal would have to undergo. At first blush, the purchase doesn't
appear to need review by the Surface Transportation Board, which generally
handles railroad mergers.
J. Bruce McDonald, a partner at Jones Day who served as deputy assistant
attorney general in President George W. Bush's Justice Department, predicted the
deal would easily pass regulators' muster. Because Berkshire's stakes in Union
Pacific and Norfolk Southern are non-controlling and relatively small, they
wouldn't likely raise antitrust concerns, McDonald said.
As of June 30, Berkshire owned 1.89% of Union Pacific's outstanding shares and
.53% of Norfolk Southern's.
"The issues are probably very simple to resolve, and I predict that DOJ would
be able to resolve them within the first 30 days" of receiving notice of the
deal, McDonald said.
Former Bush antitrust official David L. Meyer agreed.
"As I comprehend the transaction, [Buffett] is essentially acquiring the
railroad in order to own it, and not to combine it with some other competing
business" said Meyer, now a lawyer at Morrison & Foerster.
A Berkshire Hathaway spokeswoman said the company wasn't immediately prepared
to comment on the company's other railroad investments.
Robert Szabo, executive director and counsel for Consumers United for Rail
Equity, which represents shippers in Washington, said he saw nothing problematic
about Berkshire's small stakes in the two other railroads.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637; joshua.mitchell@
dowjones.com
(END) Dow Jones Newswires
11-04-091533ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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