NEW YORK - Warren Buffet's Berkshire Hathaway says it has agreed to buy Burlington Northern Santa Fe in a deal valuing the railroad at $34 billion.

Berkshire Hathaway Inc. already owns a stake of about 22 percent in Burlington Northern, and says it will pay $100 a share for the rest of the company -- a 31 percent premium over Monday's closing stock price.

The deal announced Tuesday has been approved by the boards of both companies.

Burlington Northern, the nation's second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country's economic health. The railroad also ships a large amount of goods from Western ports including everyday items such as refrigerators, clothing and TVs.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground. If approved, it would be the biggest acquisition ever for Berkshire Hathaway Inc.