Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

BERKSHIRE HATHAWAY’S BIGGEST DEAL
Berkshire Hathaway’s $35.9 billion bid for the remaining share capital of Burlington Northern Santa Fe, ranked as the fourth biggest M&A deal this year in the United States and the largest acquisition for Berkshire Hathaway on record.
Since 1980, Berkshire Hathaway and its subsidiaries have announced nearly 200 acquisitions, with 43% of those deals in the industrials sector, 34% in the financials sector and 12% in energy & power.   Just over 90% of the acquisitions announced by Berkshire Hathaway have been based in the United States.

IMS HEALTH IN LARGEST BUYOUT SINCE 2007
IMS Health agreed to be acquired by TPG and the investment board of the Canada Pension Plan for $5.2 billion, marking the largest leveraged buyout in the United States since the $27 billion buyout of Hilton Hotels in July 2007.
Eight investment banks provided financial advisory services to IMS and the private equity consortium, including Evercore Partners which currently ranks fourth for year-to-date M&A in the United States, up from 16th last year at this time.

JAPANESE M&A UP 41% OVER 2008
This week’s $11.3 billion merger of Nippon Oil Corp and Nippon Mining Holdings Inc brings the volume of Japanese target M&A to $90.1 billion for year-to-date 2009, a 41% increase over 2008 levels and one of the few regions to see year-over-year M&A growth.
Merger activity in the Japanese financial sector accounts for 38% of year-to-date activity, followed by high technology and real estate with 17.1% and 13.3% respectively.  Energy & power mergers account for 13.0% of announced volume this year, nearly three times last year’s total.

Following in the greatest of capitalist traditions, the Oracle of Omaha announced plans to buy up the shares he doesn’t already own in one of the country’s biggest railroads, Burlington Northern Santa Fe. And in an egalitarian, if unexpected, move, he said he would split his Class B stock to the tune of 50-to-1, making it possible for just about anyone to own Berkshire Hathaway’s traditionally lofty shares.

The railroad purchase is a bet on the future of America, Buffett said, and it’s his biggest acquisition ever. It values the railroad at $34 billion, and the price of $100 a share is a premium of nearly 32 percent. The premium vaults the railroad into the top spot by market cap, surpassing Union Pacific.

Buffett also owns stakes in other railroads, so it will be interesting to see if his move stirs any antitrust comments from Washington. Idiomatically, there is something profoundly rural in the Americana of Buffett’s latest bet; much more so than Berkshire Hathaway’s mainstay insurance business.

Norway's $420 billion oil fund is rattling the cage of some of the foreign companies in which it has invested. As a shareholder it deserves praise for putting its head above the parapet. But as a sovereign wealth fund it is treading a fine line.

Norges Bank Investment Management (NBIM) has been stung into action by a combination of domestic political pressure to account for its investments and heavy losses on some parts of its extensive external investment portfolio.

NBIM has publicly chastised Volkswagen for its plans to take over Porsche assets as part of a cosy merger between the two German carmakers. A detailed letter to VW Chairman Ferdinand Piech, published in full on its website, doesn't mince words.

The fund's list of gripes is pretty long, ranging from conflicts of interests, a lack of transparency, questionable financial and strategic logic for the deal to concerns about the treatment of minority shareholders.

NBIM's intervention may well be too late to have any effect on the outcome of the planned tie-up. Only legal action by the fund, which had a 0.35 percent stake in VW at the end of 2008, could prevent the deal.

Nevertheless, the VW letter goes further than NBIM has before in openly criticising one of the companies in its extensive portfolio of 8,000 equity investments. This is unlikely to be a one-off, as NBIM is attempting to raise its profile.

At a presentation in London last week it laid out the tools it has at its disposal for achieving its goals. These include dialogue and engagement, contact with regulators, proxy voting, shareholder proposals and legal action.

NBIM has used this to good effect in the case of Constellation Energy  where it managed to block a unit of Warren Buffett's Berkshire Hathaway from taking over the energy group by successfully postponing a shareholder meeting. And it is seeking a change in bylaws at four U.S. companies where it is demanding the appointment of an independent chairman.

A similar tactic at Sara Lee Corp resulted in a change to the U.S. consumer goods and food group's rules. On one level, NBIM should be applauded. Its actions are precisely the kind that large institutions should be taking to ensure the companies they own are governed properly. This is a duty that many shareholders failed to perform in the past.

In the U.S. activist investors such as Calpers -- the country's biggest public pension fund -- have been doing this for years.

However, NBIM's position is complicated because it is the arm of a sovereign government. Agitating for change at foreign companies leaves it open to accusations that it is interfering inappropriately in the affairs of other countries. That charge has mostly been levelled at sovereign wealth funds (SWFs) from the Middle East and Asia that have taken high-profile stakes in Western companies.

NBIM, which is far more transparent than most other SWFs and based in a neutral Nordic country, has a more credible claim to be a dispassionate investor rather than a tool of Norwegian foreign policy. Nevertheless, it should not be surprised if its activism is met with a backlash.

It’s official. Kraft has until Nov. 9 to say whether it will make an offer for Cadbury. If it doesn’t, it had to back off for six months. In the three weeks since Cadbury turned up its nose at Kraft’s $16.3 billion cash-and-share offer. In that time, price talk has centered on how much Kraft will, or is able, to raise that bid by.

Rhys Jones reports that analysts see compelling logic to a potential deal adding Cadbury’s high-growth emerging market business to Kraft’s wide-ranging distribution system, with few overlaps that would prompt competition concerns.

Cadbury reiterated its rejection of Kraft’s approach, but with other potential suitors so far mum, chief executive Todd Stitzer may have to settle for whatever Kraft comes up with. The market has taken the stock up to 800 pence, about 7 percent above the offer price for the share component. And if Kraft CEO Irene Rosenfeld (pictured above) wants to keep her own shareholders – including Warren Buffett – happy, she will be sure to contain any impulse to aggressively sweeten the deal.

Warren Buffett knows sweets. His Berkshire Hathaway is the largest shareholder in Kraft Foods, which made an unsolicited — and rebuffed — $16 billion bid for Cadbury. The Wall Street Journal reported that the trust that holds voting control of Hershey has hired Buffett’s favorite banker, Byron Trott, as it also weighs whether to pursue the British chocolate maker.

Trott, a former Goldman Sachs banker who runs his own firm now, is known for his expertise in candy as well as in advising family- and trust-owned companies. He convinced Buffett to pay $6.5 billion to help finance Mars in its $23 billion takeover of Wrigley last year.

Paritosh Bansal and Jessica Hall report that while Trott’s latest engagement may not have anything to do with Buffett, he may end up helping the billionaire investor. Sources previously told Reuters Hershey is unlikely to make a bid on its own for all of Cadbury. But Hershey may want to pick up pieces of Cadbury, which makes Dairy Milk chocolate, Halls cough drops and Trident gum. This could bode well for Buffett, some investors said.

Cadbury shareholders could get better value and Kraft may not have to pay up for a deal if a third party values some pieces of the British company more than what it is worth in its entirety to Kraft, these experts said.

Buffett has made no secret of his worry that Kraft may overpay for Cadbury. On Wednesday, he told CNBC that Kraft had “a lot to do” to justify the price offered for Cadbury. He also said investors undervalued Kraft’s stock, so it was using a weak currency to pay full value for Cadbury.

While Kraft may think of itself as that kid in the candy shop, Buffett also knows how and when to say no.

“He hates the practice of CEOs overpaying, particularly with their own stock when it is undervalued,” said James Armstrong, president of Henry Armstrong Associates, which manages some $400 million and owns Berkshire stock. “It’s pretty clear that he doesn’t think it’s a very attractive acquisition at this price.”

It’s also worth noting that Buffett told CNBC that Kraft CEO Irene Rosenfeld has his full confidence. That was sweet of him.

It may have only been about two percent of his holdings in the rating agency, but Warren Buffett’s decision to pare back his stake of Moody’s smacks of capitulation after a Manhattan judge ruled that just because they write opinions does not necessarily afford the much-maligned credit grading industry first-amendment protection.

Buffett‘s Berkshire Hathaway said in a filing it had sold 794,388 Moody’s shares on Sept. 1 and Sept. 2, chiseling its holding down to 39,219,312 shares. This isn’t the first time the Oracle of Omaha has seen fit to shave his share of the rating agency. Many will say these incremental measures are not a signal of a loss of faith in the business. But one could argue that the small sales serve less of a financial purpose than they signal slipping confidence. Even Buffett has said Moody’s damaged its brand by providing inaccurate ratings of SIVs, CDOs, CDSs and ETCs — the acronyms of mass financial destruction in the markets’ meltdown.

U.S. District Judge Shira Scheindlin in Manhattan said ratings on notes sold privately to a “select” group of investors were not “matters of public concern” deserving of traditionally broad protection under the First Amendment of the U.S. Constitution. Shares of both Moody’s and McGraw-Hill, which owns Standard and Poor’s, slid in response.

Buffett may yet sense a brighter day on the horizon once the lawsuits are settled. Bond market investors can’t really do without rating agencies, so any improvements to their ability to spot and give appropriately poor grades to cruddy paper could spark a quick turnaround in rating agencies’ fortunes.

Omaha, Nebraska is always a beehive of activity when devotees flock here for the annual meeting of billionaire Warren Buffett’s Berkshire Hathaway.

Shops and restaurants were doing a brisk trade on Friday. Waiters at La Buvette Grocery and Wine Bar, a bistro in the gentrified old market area, said this week-end is always one of the busiest of the year. The rest of Omaha’s old market was also jamming.

At least one vendor — this one on the outskirts of the city — was looking for more than a good day’s business.

Chops Bowling advertised unlimited hours of bowling fun for just one Class A Berkshire Hathaway share.  
  
To the unititated that might sound like a good deal. But none of the 35,000expected to convene here this week-end for what is referred to by Buffett himself as “Woodstock for capitalists” will be fooled.

Even after falling nearly 40 percent since last September, a single class A share was still worth $92,005 at Friday’s close.

What’s one of Warren Buffett’s advantages in this environment, when credit is tight, markets are in disarray and deals are so difficult to do?

Simplicity, apparently.

The famed investor gave a financing commitment letter that was just two-and-a-half pages long in the Mars-Wrigley deal, said Timothy Ingrassia, Goldman Sachs’s head of mergers in Americas.

Compare that to deal contracts that average about 90 pages these days and commitment papers that run into hundreds of pages, Ingrassia said during a panel discussion at a Practising Law Institute seminar on M&A in New York.

Chicago-based Wrigley agreed to be acquired by Mars in April. Buffett helped to finance the deal. When it announced the deal, Mars said other financing would be provided by Goldman Sachs and JPMorgan Chase.

(Photo: Warren Buffett, REUTERS/Mario Anzuoni)

The Wall Street Journal reports National City is in talks with a number of banks about a possible sale. It says Pennsylvania’s PNC Financial Services and Toronto-based Bank of Nova Scotia are among the potential bidders. In late September, NatCity said it had no need or plan to raise capital. A lot has changed since then.
 
In July, Merrill Lynch analyst Guy Moszkowski speculated that Wall Street giant Goldman Sachs would buy a deposit-taking bank to help it fund its businesses. By the fall, Goldman was no longer an investment bank at all, opting to become a deposit-taking bank holding company under heavy pressure from the Fed and the Treasury.
 
Goldman has been National City’s financial advisor, so there is a relationship to work on. Mozkowski said it was clear Goldman had considered a move to buy an old-world bank, but that it was not likely to go for it over the summer. Now Goldman has a big mid-western partner in the form of billionaire, Warren Buffett, who bought a $5 billion chunk of the Wall Street titan. It’d be interesting to see what the oracle of Omaha thinks about such a deal. If nothing else, trading at $2.23 a share on Wednesday, it’s not like they would be getting fleeced. 
 
But Ohio is one of the hardest hit of the Midwest states suffering from the economic malaise, and so may be one of the last to see any traction in a bank recovery. It may take incentive beyond National City’s low stock price to tempt a buyer. 

* ING Direct, the online banking arm of ING Group, said it is acquiring more than 3 billion pounds ($5.3 billion) worth of British deposits from Icelandic online savings providers icesave and Kaupthing Edge.

* Oil and gas exploration company Denbury Resources said it shelved its $600 million Conroe Field acquisition due to turbulent capital markets, even as it enhanced its bank credit line and trimmed its 2009 capital budget to preserve liquidity.

Deals of the day:

* Icelandic bank Glitnir said it would sell its holding in its Swedish daughter company. 

* Gerber Scientific, a supplier of automated manufacturing systems, reaffirmed its offer to acquire all outstanding shares of Canadian Virtek Vision International for C$35.1 million ($31.67 million) in cash.

* Martin Sorrell’s WPP Group declared victory in its acquisition of British market research firm Taylor Nelson Sofres, securing support from 82 percent of the target’s investors.

There’s nothing like a belle to bring a festive mood to an otherwise gloomy ball, and today that honor belongs to Goldman Sachs, which has drawn attention - and money - from none other than Warren Buffett.

Stock futures are pointing up on news of the uber-investor’s plan to purchase a $5 billion stake in the bank. And Japanese media say that Sumitomo Mitsui Financial Group is also looking to buy in.

But the fate of the Wall Street bailout plan remains the $700 billion question. Congress is continuing discussions today, with Fed chief Ben Bernanke testifying before the House Financial Services Committee.

At the same time, CNN is reporting that the FBI is investigating potential mortgage fraud at Fannie Mae, Freddie Mac, Lehman Brothers and American International Group - the very companies at the heart of this financial services meltdown.

Oil prices are up ahead of weekly data expected to show the fifth consecutive decline in U.S. crude inventories.

The dollar is down against an index of major currencies. Longer-term U.S. Treasuries are higher.

On a light day for economic reports, we’ve got existing home sales from the National Association of Realtors.

And while we’re on the subject of the housing slump, home-improvement chain Lowe’s says it’s cutting store openings for its next fiscal year.

- Lisa Von Ahn