Billionaire Buffett will be bigger force in deal financing


Buffett is in the room: Berkshire Hathaway Inc chairman Warren Buffett walking through the exhibit hall as shareholders gathered to hear from the billionaire investor at Berkshire’s annual shareholder meeting in Omaha, Nebraska on Saturday. — Reuters

NEW YORK: Warren Buffett said he would like his company to deploy much more than US$10bil to help companies pursue acquisitions in the next couple of years.

Days after Berkshire Hathaway Inc agreed to inject US$10bil of preferred equity in Occidental Petroleum Corp to help finance an acquisition of Anadarko Petroleum Corp, Buffett said he would like to put more cash to work that way, whether the next one comes along in a month or three years.

”It won’t be identical, I hope it’s larger,” he said Saturday at Berkshire’s annual meeting in Omaha, Nebraska.

“If there are any US$10bil or US$20bil or maybe even US$50bil two-day transactions that are needed in the world, believe me they’ll think of Berkshire Hathaway for sure.”

Berkshire has made similar investments in the past, committing US$3bil to Dow Chemical Co’s purchase of a chemicals maker in the midst of the 2008 credit crisis, and another US$6.5bil for Mars Inc’s takeover of Wm Wrigley Jr Co that same year.

Buffett pitched Berkshire’s ability to get deals done quickly as the main reason for him to be the first call for such transactions. — Bloomberg > See also page 6Buffett has seen his firm’s hoard of cash and US treasuries build to US$114.2bil at the end of the first quarter, and that has dragged on the company’s overall performance. He has been looking for fresh ways to put that money to work, including seeking new acquisitions in Europe.

By committing financing for deals, Berkshire could partner or compete with banks which collect billions in fees for arranging debt and equity to fund takeovers. Berkshire has stakes in major banks including Goldman Sachs Group Inc and JPMorgan Chase & Co, some of the biggest in that market. In the case of Occidental, Buffett was informed of the opportunity by Bank of America Corp chief executive officer Brian Moynihan.

Private equity firms including KKR & Co have also gotten bigger in the deal financing market, while other billionaire-backed entities like the Koch brothers’ Koch Equity Development have also been seeking yield from the business. ”I can get a call on Friday afternoon and they can make a date with me on Saturday, and on Sunday it’s done,” he said. — Bloomberg


   

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