Buffett stumps up $26bn in US rail deal

Billionaire investor Warren Buffett has underlined his burgeoning interest in low carbon technologies by shelling out $26bn to acquire one of America's largest freight railway firms, Burlington Northern Santa Fe (BNSF).

Buffett's Berkshire Hathaway investment firm already holds a 22 per cent stake in BNSF and has now agreed to pay $26bn in cash and stock to buy the remaining shares, taking on $10bn in debt in the process.

The deal is the largest in Berkshire Hathaway's history and is being seen as an indication of the Sage of Omaha's growing confidence in both the outlook for the US economy in general and the prospects for low carbon businesses in particular.

Buffett stressed that his $100 a share offer had been motivated in part by the long-term advantages rail freight is likely to enjoy over more carbon-intensive road haulage operators.

Speaking on CNBC television, he said that one gallon of diesel fuel can haul a ton of goods for 470 miles by freight train. "They do it in a very cost-efficient way and they do it in an extraordinarily environmentally friendly way, " he said.

"It's a very efficient way of moving goods. I just believe this country will prosper, that you'll have more people moving more goods 20 or 30 years from now, and that the railways will prosper."

Matthew Rose, BNSF's chief executive, said that the combination of carbon pricing legislation, rising fuel prices and traffic congestion meant that the company was likely to become increasingly competitive in the coming decades.

The deal is the latest in a line of low carbon investments from Buffett who has signalled that he regards clean technologies as a major growth area for the global economy. Last year he took a 10 per cent stake in Chinese electric car firm BYD and he has also snapped up stakes in nuclear operators and expressed growing interest in the wind energy industry in recent months.