Berkshire Hathaway Inc. shareholders have approved splitting the company's class B shares 50-fold as part of the company's $26.3-billion US acquisition of Burlington Northern Santa Fe Corp.
In November, Warren Buffett's company offered $100 US a share for the 78 per cent of BNSF that it did not already own. That was a 32 per cent premium over Burlington's stock price at the time.
The stock split will enable Berkshire to offer even small BNSF shareholders Berkshire stock as part of its acquisition of the second-largest railway in the United States. Without a stock trading in three-digit prices, it would have been next to impossible to satisfy small BNSF shareholders whose stake was valued at less than the $3,000 Berkshire's cheapest shares trade at.
Under the deal, every shareholder who currently owns a B share will receive 50 shares of the new Berkshire B share, colloquially known as a "baby Berk." As of the opening of trading on Thursday, Berkshire's class B stock will trade at roughly $67 per share. The B shares were trading at $3,436.80 US at midday on Wednesday, up more than three per cent on the day.
Experts say the move could be a positive for the stock in making it accessible to more investors, and also allowing it to be included on new stock indexes. Inclusion in an index such as the S&P 500 (which Berkshire's A shares are excluded from because of their prohibitively high price) can be a boon for a stock as mutual funds and ETFs buy the stock to track the index.
Berkshire's class A shares, which remain the most expensive U.S. stock at over $100,000 apiece, won't be split.