Burlington Northern Santa Fe Corp. (BNI)

[sumisu]

Buffett's Deal Won't Be the Last Mega-Merger, Says Diane Garnick

Posted Nov 03, 2009 11:37am EST by Peter Gorenstein in Investing, Newsmakers, Recession

http://finance.yahoo.com/tech-ticker/article/365450/Buffetts-Deal-Wont-Be-the-Last-Mega-Merger%2C-Says-Diane-Garnick

Warren Buffet is digging deep into his pockets, making a $44 billion bet on the U.S. economy. Buffett's Berkshire Hathaway announcing plans today to buy the remaining stake in railroad giant Burlington Northern Santa Fe it doesn't already own for $100 a share in cash and stock, and assume $10 billion of debt.

Apparently, the Oracle of Omaha is fired up about the acquisition – the largest in company history. "It's an all-in wager on the economic future of the United States. I love these bets," he says.

This deal comes on the heels of a smaller multi-billion dollar merger. Yesterday after the close, Stanley Works announced it would buy rival toolmaker Black & Decker for $4.5 billion in stock.

Diane Garnick investment strategist at Invesco thinks this may be the tip of the iceberg. In this accompanying clip, (recorded before both deals were announced) Garnick says mega-mergers and smaller spinoffs are bound to heat up as companies search outside their own business for revenue growth in this sluggish economy. "Now is not the time for organic growth," she states.

Garnick predicts a majority of the activity will come from the technology, consumer staples and consumer discretionary sectors.

The market and Wall Street are certain to applaud the deals, but this kind of activity will likely result in more job cuts as companies eliminate redundancies created as a result of these mergers.