Tags: buffett | berkshire | acquisition | m&a

Buffett: Berkshire Prowls for Big Acquisitions after Strong 2011

Saturday, 25 Feb 2012 09:25 AM

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., said he’s “on the prowl” for large acquisitions after the company’s biggest subsidiaries posted record earnings in 2011.

Berkshire is seeking “to purchase some large operations that will give us a further boost,” Buffett said Saturday in his annual letter to shareholders. “We now have eight subsidiaries that would each be included in the Fortune 500 were they stand-alone companies. That leaves only 492 to go. My task is clear, and I’m on the prowl.”

Buffett’s letters are reviewed by investors for insight into his views on the economy, markets and corporate governance. Since last year’s letter, Buffett acquired a lubricants maker, invested $5 billion in Bank of America Corp. and took a stake of more than $10 billion in International Business Machines Corp. as he bet on a rebound of the U.S. economy and shunned bonds with interest rates near record lows.

Bonds and other bets tied to currencies are “among the most dangerous of assets” because of the risk of inflation and low interest rates, Buffett, 81, said in an adaptation of his letter published Feb. 9 on Fortune magazine’s website.

Buffett has used letters to promote his company as a potential acquirer. Berkshire can act quickly on a deal, provide capital to target companies and allow managers the freedom to supervise the operations they built, he has said.

Buffett, the world’s third-richest man, assembled more than 70 operating businesses selling everything from insurance to energy and has said Berkshire needs more takeovers as the firm generates about $1 billion a month in earnings. He acquired Lubrizol Corp. in 2011 for about $9 billion after saying in last year’s letter that “our elephant gun has been reloaded, and my trigger finger is itchy” for deals.

Berkshire began buying back stock for the first time under Buffett last year as the billionaire bet the shares were undervalued. The company slumped 4.7 percent last year in New York trading while the Standard & Poor’s 500 Index was little changed. Berkshire climbed 4.6 percent since Dec. 31, while the S&P 500 jumped 8.6 percent.

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2012-25-25
Saturday, 25 Feb 2012 09:25 AM
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