newsworthy
report: Berkshire to be sued
over BNSF purchase
A class-action lawsuit is being readied challenging Berkshire
Hathaway Inc.’s proposed $100 a share, $44 billion acquisition
of the Burlington Northern Santa Fe Railway Co. (BNSF) as
being too low a price tag for the railroad, according to a published report.
Progressive Railroading, a magazine for railroad industry
professionals, reported on its Web site Dec. 8 that law firms in
Texas and Delaware plan to merge about a dozen lawsuits into
one class-action suit alleging that Berkshire’s offer is underpriced. The firms want Berkshire to increase its offer either
through an out-of-court settlement or a jury verdict, the publication reported.
In a statement, BNSF spokeswoman Suann Lundsberg said,
“Unfortunately, it has become almost a universal occurrence
for certain law firms to file lawsuits of this type around any
corporate [merger and acquisition] activity.” She declined further comment, citing pending litigation.
Berkshire, controlled by billionaire investor Warren Buffett,
announced the proposed deal Nov. 3. At the time, Buffett said
the purchase price represented “no bargain” for Berkshire. In
what has become an oft-repeated quote, Buffett called the offer
for BNSF an “all-in bet” on the future of the U.S. economy.
The purchase price represents a 31-percent premium over
the price of BNSF stock at the close of trading the day before
the deal was announced. However, the price is about 15 percent below BNSF stock’s all-time high of $114.56, reached in
June 2008. It is also 15 percent above BNSF’s 2009 high of
$86.50 a share, reached Oct. 14.
In early November, investment firm JPMorgan Chase ana-
lyzed the acquisition value of 12 major rail transactions—
including the proposed Berkshire-BNSF deal—dating back to
1995. Morgan found that rail transactions during that period
were priced at multiples of seven to 15 times the railroads’
earnings before interest, taxes, depreciation, and amortization
(EBITDA) on a prior-year basis. According to Morgan,
Berkshire is paying a multiple of 9. 2 on the “cyclically
depressed 2009 EBITDA for BNSF, and 8. 5 times 2010 EBIT-
DA for the company.”
Based on its data, Morgan concluded that the “deal price
appears low.” Virtually no one expects a competing offer for
BNSF because no company other than Berkshire has the
resources or the motivation to undertake such an effort.
In a related development, both companies announced the
Federal Trade Commission (FTC) has granted them early termination of the mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvement Act. The FTC action
means the deal passes antitrust muster with federal regulators.
Regulatory approval was virtually assured, since the BNSF is
being acquired by a non-railroad entity.
alliances
; Ware-house on the Prairie. OHL, a third-party
logistics service provider, has implemented
RedPrairie’s Warehouse Management and
Workforce Management solutions. OHL will
leverage the workforce solution across its distribution network and install the WMS in certain
OHL campuses based on specific customer
needs.
; Dairy distribution. TINE BA, a Norwegian producer, distributor, and exporter of dairy products,
has commissioned Swisslog to design and implement a new distribution center in Oslo, Norway.
The greenfield distribution center will be integrated with the company’s existing production
plant in Kalbakken/Oslo.
; International agreements. Retrotech Inc. and
Actiw OY, a Finland-based supplier of material
handling equipment, have formed a strategic
partnership to market ACTIV, an automated pallet
routing system, to companies with international
warehouses and distribution centers.
; Triple play. The Bon-Ton Stores Inc., a U.S.
department store chain, has implemented
HighJump Software’s Warehouse Advantage system in three distribution facilities. The company
reports that the solution has boosted order processing productivity, increased inventory accuracy, and enhanced visibility of the fulfillment workload at the sites.
; Up in the cloud. SmartTurn, an on-demand
inventory and warehouse management system
provider, has integrated its WMS with NetSuite’s
cloud computing platform. When integrated with
NetSuite’s native inventory management system,
the SmartTurn software enables wholesale distributors and e-commerce businesses to increase
shipment and inventory accuracy while reducing
inventory-related labor costs.
; Appliance alliance. Weber Distribution, a
third-party logistics service provider, has signed
an extended multiyear contract with Applica
Consumer Products Inc., a marketer and distributor of appliances. Under the new contract, Weber
will manage facilities in Little Rock, Ark., and
Toronto, Ontario, while continuing to oversee the
client’s Redlands, Calif., facility.
