As the Burlington Northern Santa Fe acquisition by Warren Buffett's Berkshire Hathaway's (NYSE: BRK.a) (NYSE: BRK.b) nears a close, the conglomerate was met with a nasty downgrade of its pristine triple-A credit rating today by S&P.
S&P lowered its long-term counterparty credit rating on Berkshire Hathaway Inc. (BRK) to 'AA+' from 'AAA'. The firm also lowered their financial strength ratings on BRK's core insurance operations to 'AA+' from 'AAA'.
The actions were taken in anticipation of Berkshire Hathaway's acquisition of Burlington Northern Santa Fe, which is expect to close no later than Feb. 15. Berkshire is financing the acquisition of the remaining 88% of the outstanding shares for about $26 billion with a combination of 60% cash and 40% through the issuance of new BRK shares. The cash portion of about $16 billion will come from cash on hand and new debt issuance of approximately $8 billion.