UPDATE 1-Berkshire set to buy BNSF after shareholder OK

* Berkshire's largest merger to close Friday

* Warren Buffett says railroads to help U.S. prosper

By Jonathan Stempel

NEW YORK, Feb 11 (Reuters) - Burlington Northern Santa Fe
Corp BNI.N shareholders approved the No. 2 U.S. railroad
company's takeover by Berkshire Hathaway Inc (BRKa.N) (BRKb.N),
clearing the way for the largest acquisition of billionaire
investor Warren Buffett to be completed on Friday.

Berkshire is buying the 77.4 percent of Burlington Northern
that it did not already own. The cash-and-stock transaction was
valued at $26.4 billion, or $100 per share, and valued all
Burlington Northern at about $34 billion.

"Tomorrow begins the first century of ownership of BNSF by
Berkshire Hathaway," Buffett, 79, said in a statement. "I'm
looking forward to every day of it as our railroad does its
part to ensure the future prosperity of the country."

The roots of Fort Worth, Texas-based Burlington Northern
date back to 1849.

Of the Burlington Northern shares not owned by Berkshire,
about 70 percent were voted for the merger, exceeding the
needed two-thirds approval.

Berkshire said holders of 40.9 percent of the shares chose
to swap them for cash, 43.4 percent chose stock, and the rest
made no choice. Berkshire targeted a 60/40 cash-stock split.

Based in Omaha, Nebraska, Berkshire owns roughly 80 other
businesses that sell such products as Geico car insurance,
Dairy Queen ice cream and Fruit of the Loom underwear.

Last month it conducted a 50-for-1 split of its Class B
shares, which traded around $3,400, to let Burlington Northern
shareholders do stock swaps rather than be forced to cash out
and pay taxes. Higher-priced Class A shares were not split.

The takeover has already cost Berkshire its last "triple-A"
credit rating, in part because it is a big bet that could weigh
on capital and eats up a good chunk of cash.

Fitch Ratings, the first major credit agency to take away
its triple-A rating, downgraded Berkshire again on Wednesday.

Berkshire's largest previous acquisition was its 1998
takeover of the reinsurer General Re.

UP TO THE HILT

Last month, Burlington Northern posted a 13 percent drop in
quarterly profit that nonetheless topped analyst forecasts.

The takeover means the company will no longer need to
report stand-alone quarterly results.

That is a relief to Chief Executive Matthew Rose, who said
it can be "frustrating" having to cater in part to investors
focused on the short term.

"What our team is doing today really won't be felt in terms
of capital spending for five or seven, or even 10 or 15 years
and beyond," he said on a Thursday conference call. "Warren has
a great reputation for looking past the quarters."

Buffett is the world's second-richest person and perhaps
its most admired investor. He has sought to justify what he
called paying "up to the absolute hilt" for Burlington
Northern.

"If you look at the next 50 years, this country is going to
grow, it's going to have more people, it's going to have more
goods moving, and rail is the logical way for many of those
goods to travel," he told the company's employees in December.

Berkshire will replace Burlington Northern in the Standard
& Poor's 500 .SPX index.

In late morning trading, Burlington Northern shares were up
26 cents at $100.22, Berkshire Class A shares were up $362 at
$111,912, and Berkshire Class B shares were up 18 cents at
$74.60.
(Reporting by Jonathan Stempel, editing by Matthew Lewis)