The deal also threatened Berkshire's AAA rating by Standard & Poor's.

The lawsuit, filed on Wednesday in Texas state court, claims directors at Burlington Northern did not provide shareholders with sufficient information to allow them to determine whether they should tender their shares for the merger agreement.

Burlington Northern directors agreed to a termination fee, a "no- shop, no-talk" provision and other protections for Berkshire "well before any price-maximising process took place in a blatant effort to ensure that controlling shareholder Berkshire, their favored partner, is Burlington Northern's ultimate acquirer", the complaint says.

Berkshire will pay $23.6 billion in cash and stock for the shares it does not already own. The total value of the company is $34 billion.

Berkshire will take on $10 billion in net debt as part of the acquisition of the Fort Worth, Texas-based railroad for $100 a share.

Buffett, whose firm already owns more than 20 percent of Burlington, described the deal as an "all-in wager on the economic future of the U.S."

On Wednesday it emerged that Berkshire was more likely to lose its AAA rating from Standard & Poor's after the Burlington deal.

"This transaction will decrease the liquidity and capital adequacy of the insurance operations," the ratings company said on Wednesday, placing Buffett's firm on "CreditWatch with negative implications."

Berkshire lost the top grade from Moody's Investors Service and Fitch Ratings earlier this year as declines in the value of derivatives tied to stock markets contributed to the company's first quarterly loss since 2001. Buffett's insurance units scaled back catastrophe coverage this year to protect capital.

Standard & Poor's expected to complete its review within 90 days.

Buffett said in May that the loss of top credit grades from Fitch and Moody's had "no economic impact" on Berkshire. "My pride may be wounded just a bit," he said.

"We sold bonds just a couple of days after the Moody's downgrade and we sold them at a spread that was much narrower than it would have been a month earlier."

Berkshire is the biggest shareholder in Moody's Corporation, parent of Moody's Investors Service General Electric and drug maker Pfizer are among the companies that lost their top credit grades from Standard & Poor's in the past year.

Buffett has drawn down Berkshire's cash hoard, valued at more than 44bn at the end of 2007, to finance firms including Goldman Sachs and General Electric as banks scaled back funding. Berkshire's cash holdings were about $24.5 billion as of June 30.