November 3rd, 2009
03:01 PM ET

Financial Dispatch: Buffett’s biggest bet yet

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/US/08/02/ford.gain/art.ford.vehicles.gi.jpg caption="General Motors, Ford Motor and Nissan reported that their sales were up from a year ago. "]
Andrew Torgan
CNN Financial News Producer

It’s a busy day on the deal front, and it starts with Warren Buffet’s big bet on the future of the United States.

Buffett's Berkshire Hathaway is buying railroad operator Burlington Northern Santa Fe for $44 billion, in what he characterizes as an "all-in wager on the economic future of the United States."

Berkshire, which already has major stake in the company, will acquire the remaining 77.4% of the company in a cash-and-stock offer worth $100 per share.

"Our country's future prosperity depends on its having an efficient and well-maintained rail system," Buffett said in a statement.

The deal, which would rank as the largest acquisition in Berkshire Hathaway's history, would also include $10 billion of Burlington Northern debt.

It would also expand the already massive portfolio of companies Berkshire already owns. Brand-name businesses such as auto insurer Geico, See's Candy and Fruit of the Loom are all subsidiaries.

And in a major consolidation of the tool industry, Stanley Works agreed late Monday to acquire Black & Decker in a $4.5 billion all-stock deal.

The deal is expected to close in early 2010, and the new company will be called Stanley Black & Decker.

Stanley, which is a leader in hand tools, owns brand names including FatMax, Bostitch and Mac Tools. Black & Decker, known for its power tools, owns Kwikset, Baldwin and Price Pfister, among others.

The deal will also likely mean thousands of job cuts are on the horizon at the combined company.

Meanwhile, big job cuts are looming at Johnson & Johnson.

The consumer health products maker says it will cut up to 7% of its global workforce – or up to 8,000 jobs - as part of an ongoing cost-cutting plan that the company says will save between $1.4 and $1.7 billion by 2011.

The company will also simplify its business structure and remove some layers of management to streamline its operations.

J&J has about 117,000 employees spread across more than 250 companies.

Switching gears if you will, the major automakers are reporting that their October sales rebounded following a weak September, as an increase in the number of cars available at dealers helped to get sales moving once again.

General Motors, Ford Motor and Nissan also reported that their sales were up from a year ago while Toyota said its sales were essentially unchanged from the same period last year. Chrysler Group reported sales fell 30% from October 2008, however.

Auto sales shot up for most major car manufacturers in late July and the first three weeks of August thanks to the government's “Cash for Clunkers” program, which offered up $4,500 of federal money to buyers trading in gas guzzlers when buying new cars. But the popular program left most auto dealers with limited supplies of vehicles in September.

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