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As part of the deal, Berkshire will split its class B shares 50-to-1 to help pay for the acquisition.

Wow Buffett splitting stock?!



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That's actually pretty amazing; maybe now they'll be affordable by ordinary folk. (Some of their shares were $60K at some point.)


For those lazy to click through, Class-A shares are just a tad over $100k now.

No, you can buy B shares at 30-1 value of A shares for about $3000.

It is a big deal, but they aren't splitting their class A shares. Class B was introduced to make shares more affordable to people who wanted to invest, but wanted a lower entry point. I think splitting the B stock is keeping with that sentiment.

I believe Class B wasn't introduced for that reason, if I remember correctly it had something to do with people with Class A needing to divide stock to leave it in their will or as gifts.

How does splitting shares help pay for a deal?

The split won't actually raise capital for the deal, but will help to payoff shareholders of the railroad. According to http://www.marketwatch.com/story/berkshire-approves-50-for-1... the split is to "accommodate holders of smaller amounts of BNSF shares who opt for a share exchange rather than a cash payment."

So, some shareholders of Burlington will opt for shares instead of cash, and since you can’t own a fraction of a share, they have to split the stock to accommodate them.


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