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December 7, 2009
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On December 4, Berkshire Hathaway Inc. (BRK.A), (BRK.B) announced that it will consider its share splitting decision by shareholders vote in its special meeting on Jan 20, 2010. Warren Buffett, who had previously not considered splitting its Class A or Class B shares is now considering a 50-to-1 split of its Class B shares as part of its acquisition of Burlington Northern Sante Fe Corp (BNI).
In early November, when Buffett announced his company's intention to acquire Burlington Northern, he also announced that its "B" shares would be split 50 to 1. It is rare to see a stock split for either the Berkshire "A" or "B" shares. Over the years, Buffett has resisted calls to split the stock. This reflected management's desire to attract long-term investors as opposed to short-term speculators.
The "A" shares have long been out of reach for nearly everyone except professional investors. In the past 52 weeks, these shares traded in the range of $70,050 to $108,450 each. The "A" shares continue to appear to be out of reach for most investors.
Many investors turned to "B" shares, but even those cheaper shares have traded in the range of $2,241 to $3,569 in the last 52 weeks.
Though the majority of the shares issued in the $100-per-share deal will be Class A shares, the split will make it easier for investors of smaller amounts of Burlington shares who opt for a share exchange rather than cash to receive Class B shares. The merger is expected to close in the first quarter of 2010.
For Berkshire, the acquisition of BNI -- the second largest railroad in the U.S. -- will be the biggest to date. With this acquisition, Berkshire is adding a railroad transportation business to its already diverse range of businesses including retail, insurance, publishing, manufacturing and several regional electric and gas utilities.
Read the full analyst report on "BRK.A"
Read the full analyst report on "BRK.B"
Read the full analyst report on "BNI"
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