Bigger Deals Ahead for Berkshire Hathaway

May 7, 2012 Updated: October 1, 2015
Warren Buffett Rings Opening Bell At New York Stock Exchange
Berkshire Hathaway Inc. Chairman and CEO Warren E. Buffett smiles at the New York Stock Exchange before ringing the opening bell on September 30, 2011 in New York City. (Mario Tama/Getty Images)

Berkshire Hathaway CEO Warren Buffett, over the past few days, discussed a wide range of topics including his recent investment decisions, succession plan, and of course, his health.

One of the highlights of the Berkshire shareholder meeting over the past weekend was when Buffett revealed that he recently attempted to make an acquisition worth more than $22 billion, and that he would have sold some of the company’s stock holdings to see the deal through. Although the target was not named, had a deal been struck, it would have been Berkshire’s second biggest takeover ever, just behind its purchase of railroad company Burlington Northern Santa Fe in 2010.

Buffett did not close the door on that deal, saying that the two companies may come together some time in the future, but they had not reached an agreement at the time.

On Monday, in a wide-ranging interview with Bloomberg TV, Buffett said that some of Berkshire’s biggest acquisitions will come in the future.

“Berkshire will continue to grow. Some day, $34 billion will not be the limit,” he said, referring to the purchase price of Burlington.

Buffett, 81, and his partner Charlie Munger, who is 88, have built Berkshire into a marquee investment holdings company. Today, Berkshire is not infatuated with the complex financial or high technology industries, preferring to hold companies with strong management and simple operations in railroad, operations, manufacturing, and consumer goods sectors.

Earlier in the year, Buffett wrote to shareholders that the board has picked a successor, although he did not disclose “his” name—Buffett’s successor as CEO was confirmed to be a male.

One question posed to Buffett during the meeting was whether his successor would be able to pull off high-profile deals such as his preferred share investments in Goldman Sachs Group Inc. and General Electric Co. in 2008. His reply was not every one of his deals would be able to be pulled off by others, but his successor will be defined by his own deals, given the ample amount of cash on Berkshire’s balance sheet, which currently exceeds $40 billion.

Health a ‘Nonevent’

Warren Buffett was recently diagnosed with prostate cancer and the crowd of more than 30,000 people attending the meeting in Omaha, Neb., must have had that at the front of their minds. During the meeting Buffett tried hard to reassure the crowd about his health and termed it a “nonevent.”

Buffett said that his team of doctors detected his cancer early and that it doesn’t represent a serious threat to his life. “I may have a little less energy, but that may mean I do fewer dumb things,” Buffett said jokingly. The majority of the meeting revolved around Buffett’s health and his successor if the need arose. Buffett told shareholders through this year’s annual letter that the board had selected his successor in the case of any emergency and that there were two more back up candidates.

Euro Situation a Problem

On Monday, the European elections were also on investors’ minds. On CNBC’s Squawx Box, Buffett said he felt that the euro will come back, but it will take a long time given the circumstances. “It’s the real problem of dealing with 17 countries, though, because even if you managed to sell the people on one or two or three countries on the fact that it’s an advisable course of action, you really need 17 going in the same general direction,” Buffett told CNBC’s Becky Quick.

Once again, however, Buffett advised that investors should never buy or sell stocks based on one day’s news, but consider a company’s overall value long term.

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