Buffett gives FTSE a boost after striking his biggest ever deal

Buffett gives FTSE a boost after striking his biggest ever deal

Billionaire investor Warren Buffet provided a surprise lift to struggling markets in the UK after announcing his investment group had bought a US railroad giant for $26 billion.

In what he called a 'wager' on the economic future of the US, a bullish Buffett revealed he was buying up the remaining shares in Burlington Northern Santa Fe, the transport group which owns some 390 different railroad lines in the States.

Buffett's investment company, Berkshire Hathaway, already owned nearly a third of the group, but it has now bought the remaining 77.4% of shares for $100 per share, paid for in cash and stock.

The price paid by Buffett represents a 31.5% hike on Burlington's closing price yesterday, and puts the value of the entire company at $34 billion.

Buffett's move to snap up the group now buoyed shares, while his upbeat comments on the US economy also provided a lift. He said: 'Our country's future prosperity depends on its having an efficient and well-maintained rail system.

Buffett, who is chairman and chief executive of Berkshire, added: 'Conversely, America must grow and prosper for railroads to do well. Berkshire's $34 billion investment is a huge bet on that company, chief executive Matt Rose and his team, and the railroad industry.'

UK markets climbed off lows after the move with the FTSE 100 back above 5,000. By 14:17am, with the Dow Jones and S&P 500 poised to open higher, the UK blue chip index was at 5,016.8 points, down 87.7 points but well off lows of 4,985.09 seen early.

Miners and banking stocks have provided the main drag on the Footsie today. As US markets opened, Royal Bank of Scotland – which today joined the government’s asset protection scheme and announced it was selling many of its assets to comply with European rules – remained the top faller, down 10% at 34.85p.

citywire.co.uk