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Wells Fargo Increases Quarterly Dividend 14% to 25 Cents

Wells Fargo & Co. (WFC), the bank that counts billionaire Warren Buffett’s company as its largest shareholder, raised its quarterly dividend by 14 percent after reporting a record profit for 2012.

The 3-cent increase brings the payout to 25 cents, the San Francisco-based company said today in a statement. Investors who own the stock as of Feb. 1 will be paid on March 1.

Among them is Buffett’s Berkshire Hathaway Inc. (BRK/A), the Omaha, Nebraska-based insurer and investment company that holds a stake of about 8 percent, according to data compiled by Bloomberg. The higher dividend means another $50.7 million annually for Berkshire, based on the 422.5 million-share stake listed as of Sept. 30. The lender’s stock yields about 2.9 percent.

Wells Fargo said the new dividend was part of the bank’s 2012 capital plan, which passed Federal Reserve review last year. U.S. banks this month are asking the Fed to approve a new round of dividend increases and share buybacks, with Wells Fargo’s plan submitted Jan. 4, the bank said.

Led by John Stumpf, Wells Fargo is the biggest U.S. home lender and the leader by stock-market value. The company reported a record profit for 2012, with net income rising 19 percent to $18.9 billion.

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IBM's shines with fourth quarter, 2013 outlook

Reuters) - IBM, the world's largest technology services company, gave a better than expected 2013 outlook after a solid fourth quarter that analysts say has more to do with Big Blue's smooth execution than a vibrant tech spending environment.

Companies had been widely expected to hold back on IT purchases in December in part because of worries about the so-called U.S. fiscal cliff. Automatic tax increases and spending cuts would have been triggered had Congress not made a deal to avert the cliff and could have pushed the weak U.S. economy into recession.

But International Business Machines Corp said on Tuesday that its quarterly results beat forecasts and it plans to achieve earnings of at least $16.70 a share for the full year, above analysts' consensus forecast of $16.57.

While some analysts said IBM's earnings may be a sign of an improved tech spending environment, others said the strong results were specific to IBM's business model.

"IBM is better positioned in a tough environment than most tech companies are," said Cindy Shaw, managing director at Discern.

IBM made a bold strategic move a decade ago when it bought PriceWaterhouse's consulting business and then decided to exit the PC business, betting its future was in finding solutions to business problems with the help of software and technology.

That strategy appears to have paid off.

"What IBM does better than anyone, with the exception of Accenture, is solving problems and I am not talking about taking out some costs, but really driving revenue," Shaw said.

In addition, she said, IBM was strong in "hot growth markets" such as data analytics, cloud computing, emerging markets and what IBM calls smarter planet, which aims to improve areas such as traffic, power grids and food production.

Sterne Agee analyst Shaw Wu agreed, saying the success appeared to be more specific to IBM than the industry in general.

"The results show that the IBM advantage and business model - vertical integration of hardware and software - is difficult to replicate," he said.

"IBM has been doing this the longest and customers are very accustomed to it. They have a much stronger offering and brand name."

As a result quarterly net income rose 10 percent to $6.1 billion, or $5.39 a share from $4.71 a year earlier. Revenue dropped 1 percent to $29.3 billion due to the sale of its retail business in the third quarter.

Analysts had expected the Armonk, New York-based company to report net income of $5.95 billion, or $5.25 a share, on revenue of $29.05 billion, according to Thomson Reuters I/B/E/S.

Revenue grew in particular because of an 11 percent increase in IBM's growth markets in Brazil, India, Russia and China.

Software revenue was up 3 percent in the quarter.

Some analysts said IBM's better than expected results were a sign that tech spending might not have been as bleak as expected.

"It is better than what people had feared," said Brian Marshall, an analyst at ISI Group.

"Virtually every segment did a little bit better than people expected. It supports the fact that things are getting better out there at least from a tech industry standpoint."

Andrew Bartels, an analyst with research firm Forrester Research, said: "We were expecting a lot of companies were sitting on their wallets until it became clear what was going to become of the fiscal cliff.

"Given the fact it's Q4 with a cloud of the fiscal cliff, it's a positive indication that tech software will be doing better in the next couple of months."

IBM shares rose more than 4 percent to $204.50 after closing at $196.08 on the New York Stock Exchange

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Buffett Reaps Gains as USG to Eagle Build on U.S. Housing Rally

Building-supply stocks such as USG Corp. (USG), in which Warren Buffett holds a 16 percent stake, and Eagle Materials Inc. (EXP) that more than doubled last year are poised to rise further as the U.S. housing market extends its recovery.

“We’re in the early stages of what we think is a long- term, multiyear recovery in housing,” said Philip Orlando, chief equity market strategist at Federated Investors Inc. “You have a tremendous amount of catch-up that’s going to drive the next five or 10 years.”

USG, the drywall maker with Buffett’s Berkshire Hathaway Inc. as the biggest shareholder, and Eagle Materials continue to climb after surging in 2012 as homebuilding rebounded on pent-up demand and low mortgage rates. The December new-home sales rate may be the highest since April 2010, according to the median estimate of economists surveyed by Bloomberg ahead of a Commerce Department report tomorrow.

That continuing recovery, along with a remodeling market growing as unemployment drops, rebuilding from superstorm Sandy and rising prices for construction materials, will propel the stocks, said Orlando. His Pittsburgh-based firm owns USG, Eagle Materials, insulation maker Owens Corning and other housing- related shares such as Miami-based builder Lennar Corp. (LEN)

Housing starts reached 780,000 last year, still only about half the annual average of 1.47 million since 1959, the earliest year for Commerce Department data, and a fraction of 2005’s 2.1 million. As they keep climbing from 2009’s low of 554,000, materials makers probably will have to boost production.

‘Ridiculously Strong’
Housing tipped the U.S. into its deepest recession in six decades at the end of 2007 after a building bubble fueled by risky mortgages burst. Contrary to what occurred in past economic recoveries, it has been one of the last industries to rebound. In 2012, companies such as Chicago-based USG and cement maker Texas Industries Inc. (TXI) began to post operating profits after years of losses, boosting the shares.

“2012 was almost ridiculously strong, but it really hadn’t participated in the first 2 1/2 years of a bull market,” said Michael Shaoul, chairman and chief executive officer of Marketfield Asset Management LLC in New York, which owns shares of USG and Dallas-based Eagle Materials. “The upside leverage in that sector is significant.”

USG fell 1 percent to $29.59 yesterday in New York for a gain this year of 5.4 percent, outpacing the Standard & Poor’s 500 Index’s 4.8 percent increase. Eagle Materials dropped 0.8 percent to $64.41 and has risen 10 percent in 2013.

Buffett Stake
The value of Buffett’s USG stake of 17.1 million shares climbed to $479 million last year as the stock almost tripled to its highest year-end close since 2007.

Buffett predicted a housing recovery in 2011 and has long invested in housing-related companies. Berkshire has held USG shares since at least 2000 and is the biggest investor in Wells Fargo & Co. (WFC), the largest U.S. home lender. Berkshire’s Acme Brick unit in 2011 bought Montgomery, Alabama-based Jenkins Brick Co.

Makers of wallboard, roofing shingles, insulation and door trim are cautious about increasing capacity even as signs point to a sustained recovery in homebuilding, said Mike Wood, an analyst at Macquarie Group Ltd. in New York. That’s because a predicted industry rebound had been slow to materialize since the 2009 low in housing starts.

“The pricing story is going to be the main area that helps drive stocks in 2013,” Wood said. “Even though capacity utilization is weak, it’s improving and that’s giving some producers pricing power.”

Higher Prices
USG’s third-quarter average price for wallboard rose 18 percent to $131.97 a thousand square feet from $111.66 a year earlier, the company said in an Oct. 18 earnings report. Wallboard producers have sent letters to customers discussing price increases of 25 percent this year, Robert Denk, a senior economist at the Washington-based National Association of Home Builders, said in a telephone interview.

Makers of plywood, roofing materials and insulation are all seeking to raise prices, Denk said. The cost of lumber and plywood climbed 11 percent in 2012 and insulation materials rose 5.1 percent, according to Associated General Contractors of America, an Arlington, Virginia-based trade group.

Homebuilders have difficulty resisting the increases because 80 percent of them produce fewer than 25 houses a year, while buying materials from a limited number of large makers, Denk said. Builders will step up their pace gradually to a sustainable level of 1.4 million starts a year, he said.

‘Upward Pressure’
“There will be upward pressure on material prices as the housing market recovery gains momentum,” Denk said.

With mortgage rates near a record low, there’s room for homebuilders to pass along rising material costs to buyers, Shaoul said. The average rate for a U.S. 30-year fixed mortgage was 3.47 percent as of Jan. 22, according to Bankrate.com data compiled by Bloomberg. That compares with an average of 5.59 percent during the housing boom period from 2003 through 2006.

Price increases and higher sales volumes are helping building-materials companies return to profit. Owens Corning, based in Toledo, Ohio, reported a third-quarter profit for its insulation unit that was the first in four years.

The cement unit of Dallas-based Texas Industries posted operating earnings of $6.1 million for its quarter ended Nov. 30, compared with a loss of $5.4 million a year earlier. USG had operating profit of $81 million for the first nine months last year after a loss of $163 million a year earlier.

Rising employment and low interest rates are also contributing to jump-start home repair and remodeling, which had been stalled since the recession, said Kathryn Thompson, a founder of Thompson Research Group in Nashville, Tennessee.

“Just as it was a multiyear downturn, this is going to be a multiyear uptick,” she said in a telephone interview.

Building-materials shares such as USG and Eagle Materials that more than doubled in 2012 won’t repeat those gains this year, though they “are still going to outperform” the S&P 500 (SPX), said Orlando, the Federated Investors equity strategist.

“If you can get a stock that’s doing 20, 25 or 30 percent, you’re crushing it,” he said.

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Buffett NYSE Bid Reinforcing Confidence as S&P 500 Nears Record


Warren Buffett’s proposal to take over NYSE Euronext, while rejected in favor of a higher offer last year, is boosting optimism that the world-famous stock picker sees a rebound in trading from a four-year low.

The bid for the New York Stock Exchange owner, made in November and disclosed yesterday in a government filing, came amid signs investors are returning to stocks after volume fell 18 percent in 2012. U.S. equity funds took in a record $3.1 billion at the beginning of this year after investors pulled about $250 billion since 2009, based on data from EPFR Global.
Warren Buffett, chairman of Berkshire Hathaway Inc. may have proposed buying NYSE Euronext because the shares arecheap.
Duncan Niederauer, chief executive officer of NYSE Euronext, talks about IntercontinentalExchange Inc.'s agreement to acquire NYSE Euronext and the outlook for the combined company. He speaks with Erik Schatzker on Bloomberg Television's "Market Makers" at the sidelines of the World Economic Forum's annual meeting in Davos, Switzerland. (Source: Bloomberg)
A trader talks on the phone while working on the floor of the New York Stock Exchange in New York.

.The value of American equities has risen by $1 trillion this year as the biggest January rally since 1987 pulled the Standard & Poor’s 500 Index within 4.4 percent of its record. Even though IntercontinentalExchange Inc. (ICE) won NYSE Euronext with its $8.2 billion bid announced in December, Berkshire Hathaway Inc. (BRK/A)’s interest may signal exchange earnings are poised to rebound, according to PNC Wealth Management and Tabb Group LLC.

“He’s saying maybe things will turn around and volume will come back,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a phone interview. His firm manages about $112 billion. “It is a company that just benefits from transactions, and we all know the challenges of stock volume moving away from the exchanges.”

Richard Adamonis, a spokesman for NYSE Euronext, declined to comment. Buffett didn’t respond to a request for comment sent to an assistant.

‘Company A’
Berkshire was “Company A” named in a regulatory filing yesterday as making the Nov. 28 bid for NYSE Euronext, said two people with knowledge of the matter who asked not to be identified because the offer wasn’t public. The transaction was conditioned on the exchange operator selling its European derivatives business, according to the filing.

CME Group Inc. (CME), the world’s largest futures exchange, also approached NYSE in October last year about a deal with its derivatives business, according to two people familiar with the situation. The Chicago-based exchange, which offered to provide clearing for NYSE’s Liffe U.K. derivatives exchange, and NYSE didn’t start formal negotiations, the people said.

Buffett may have proposed buying the company because the shares are cheap, said Lawrence Creatura, a Rochester, New York- based fund manager at Federated Investors Inc., which oversees about $370 billion. NYSE Euronext traded at 11.6 times reported earnings in November, compared with a multiple of 16.3 for a measure of 25 exchange operators around the world, according to data compiled by Bloomberg.

NYSE Valuation
“It’s reasonable to assume that he perceived a mismatch between the value of NYSE and the then-current price,” Creatura said in a telephone interview yesterday. “There’s a price tag for everything, even things that aren’t growing.”

Average daily volume for stocks listed on U.S. exchanges has declined every year since 2009, falling 18 percent in 2012 to a low of 6.42 billion shares per day, according to data compiled by Bloomberg. That compares with 9.77 billion in 2009, the data show. The daily average in 2013 has been 6.31 billion.

NYSE Euronext’s share of U.S. equity trading has shrunk to about 20 percent from 82 percent a decade ago amid the proliferation of other venues, dark pools and broker-run markets. While profit at the company has fallen for the past three quarters, analysts are projecting a 22 percent rebound this year, based on estimates compiled by Bloomberg.

“The fact that Mr. Buffett made an offer has got to make you feel that this industry is not dead and ready for a return to glory,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston, wrote in an e-mail. “I would view this as a positive for exchange volumes.”

Earnings Season
ICE, based in Atlanta, said on Dec. 20 it will pay $33.12 a share for the owner of the New York Stock Exchange. Both boards approved the proposal and the companies expect to complete the transaction in the second half of 2013.

ICE said will seek a European Union merger review of its plans to buy NYSE Euronext to avoid multiple probes across the 27-nation bloc. While the company must formally ask U.K., Portugal and Spain to approve the deal, it said it will ask for EU regulators to take charge of examining the transaction, according to a regulatory filing published yesterday.

NYSE Euronext (NYX) is scheduled to report fourth-quarter earnings on Feb. 5. The shares have risen 40 percent since Dec. 19, the day before the takeover was announced, compared with a 7.9 percent advance for the Bloomberg World Exchange Index.

Stock Bets
Buffett has relied on long-term stock bets on companies such as Coca-Cola Co. and Wells Fargo & Co. (WF) to fuel the growth of his Berkshire Hathaway from a failing textile maker to a $242 billion firm.

“The stock market generally is the best place to have money,” he said in a CNBC interview on Oct. 24.

Berkshire Hathaway’s cash pile climbed to near-record levels of $47.8 billion in the third quarter as Buffett extended his search for larger acquisitions. The Omaha, Nebraska-based company’s more recent deals have included a building-insulation maker and food-distributor Meadowbrook Meat Co. as Buffett’s firm completed so-called bolt-on purchases that cost $1.8 billion in the first nine months of 2012.

“He’s signaling confidence from a volume perspective and perhaps signaling the fixed income markets are tapped out,” Larry Tabb, chief executive officer of the Tabb Group. “He seems to suggest we could see a rotation back into equities.”

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Berkshire Adds 17,000 to Payroll as Buffett Extends Reach

Berkshire added about 17,000 employees since the end of 2011 as Chairman and Chief Executive Officer Warren Buffett expanded manufacturing, media, insurance and retail operations.

Berkshire and its more than 70 operating subsidiaries have about 288,000 workers, the Omaha, Nebraska-based firm said yesterday in a regulatory filing. That’s 6.3 percent higher than the 270,858 disclosed in the 2011 annual report.

Buffett’s willingness to invest in a variety of industries has reduced Berkshire’s reliance on insurance operations and made the firm one of the largest U.S. employers. Companies that primarily sell insurance, such as Travelers Cos. (TRV) and Chubb Corp. (CB), have trimmed staff in the five years through the end of 2011 as they returned capital to shareholders. Berkshire pays no dividend and went decades without buying back shares.

Buffett has become more focused on “hard assets and older- fashioned business,” such as railroads and manufacturing, said Meyer Shields, an analyst at Stifel Nicolaus & Co.

Berkshire’s workforce has soared from about 147,000 a decade ago as Buffett, 82, has made some of his largest acquisitions, including the 2010 purchase of railroad Burlington Northern Santa Fe for $26.5 billion and 2011’s addition of chemical maker Lubrizol Corp. for about $9 billion.

“When you’re buying a company with a market value in the billions or tens of billions, then you’re going to get significant headcount associated with that,” Shields said.

Buffett also has empowered deputies to make deals to expand their businesses. Berkshire managers including Lubrizol CEO James Hambrick and Victor Mancinelli, who leads farm-product unit CTB Inc., announced deals last year to expand operations in the U.S. and Europe. Such “bolt-on” purchases cost Berkshire about $1.8 billion in the nine months ended Sept. 30.

Party Supplies
Buffett also acquired more than 60 newspapers including the Richmond Times-Dispatch and bought Oriental Trading Co., the seller of party supplies. The billionaire has said he prefers buying companies outright to investing in their stock.

The expansion means Buffett employs a growing share of U.S. workers. There were about 134 million U.S. employees on non-farm payrolls at the end of last year, compared with 130.2 million 10 years earlier, according to Labor Department data.

Job growth in the U.S. economy was 1.4 percent last year, matching the gain of 2011. It was the best back-to-back reading since 2005-2006.

Berkshire has advanced 9.3 percent this year in New York trading, beating the 5.7 percent gain in the Standard & Poor’s 500 Index. Buffett’s company rallied 17 percent last year while the index climbed 13 percent.

Real Estate
A rebounding U.S. residential real estate market has helped Berkshire’s subsidiaries that make carpet, bricks, insulation and other building products. Housing starts climbed to a 954,000 annual pace in December, the highest level since 2008, Commerce Department figures show.

Buffett cut the workforce in 2009 by more than 20,000 as manufacturing and retail operations slumped amid a U.S. recession.

“We will be adding people at some point, but we won’t do it until we see the demand come back,” Buffett said in a 2009 interview conducted by the CEO of Business Wire, the Berkshire unit that posts corporate press releases. “It’ll be a little slow because we don’t want to go through what we did before. Although, I will guarantee you that three years from now, our brick companies, our carpet company, and our insulation company will all be employing far more people than now.”

The latest disclosure, in a filing tied to debt issuance, didn’t break down employment by unit. The 2011 annual report, issued February of last year, showed 39,000 workers at the railroad, more than 27,000 at Fruit of the Loom, about 26,000 at auto-insurer Geico and 22,650 at carpet maker Shaw.

Geico said in December that it was planning to hire more than 4,000 new employees in 2013 after expanding its payroll by almost 20 percent in the last five years

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Buffett ‘Magic’ Assists Iscar in Bid to Double Tools Business

Berkshire's International Metalworking Cos. is seeking to double sales and profit and is counting on Warren Buffett, its “No. 1 salesman,” to help it meet that goal.

“When you go around the world with him it’s like magic,” Eitan Wertheimer, chairman of the Tefen, Israel-based company, said in an interview in Caesarea broadcast today on Bloomberg TV. Wertheimer has traveled with 82-year-old Buffett to India, China and Japan. The business “couldn’t afford” not to have him come along, Wertheimer said.

The company, known as Iscar, was founded in 1952 by Eitan’s father Stef Wertheimer from an old rented shack. It makes cutting gear for industries including aerospace and auto manufacturing. Buffett’s Omaha, Nebraska-based Berkshire paid $4 billion in 2006 for an 80 percent stake in the company, which has about 11,000 employees worldwide.

“I would love to see Iscar doubling itself,” said Eitan Wertheimer, 61, declining to provide a time frame or financial details on the company. “I think we have a good chance to double ourselves.”

It will probably take Wertheimer a decade to meet his goal, said Martin Prozesky, a London-based analyst at Sanford C. Bernstein.

Iscar controls about 8 percent of the market, compared with about 20 percent held by competitor Sandvik AB (SAND), Prozesky said. “Positioning yourself as a good growth brand in China is a key challenge,” he added.

Israel is seeking to boost sales to fast-growing economies such as China as Europe continues to struggle and global trade has slowed. Exports account for about 40 percent of Israel’s gross domestic product.

Even with slower growth, China is “an amazing market” for Iscar, Wertheimer said.

Buffett’s involvement is a “huge” endorsement for Iscar and “definitely helps them gain new customers,” Prozesky said.

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Interessante articolo... sarà il 2013 l'anno giusto per un big deal di Berkshire ?
Troverà Buffett il suo elefante ?

Megamerger Failures Cloud 2013 Deal Resurgence: Real M&A


While the strongest resurgence in dealmaking since the financial crisis is cheering investors and emboldening acquirers, history shows that the largest mergers are often more trouble than they’re worth.

About two-thirds of company takeovers exceeding $20 billion since 1996 -- including the unions of Pfizer Inc. and Pharmacia Corp., Sprint Corp. and Nextel Communications Inc., and Daimler- Benz AG and Chrysler Corp. -- generated losses for the acquirer’s shareholders, according to data compiled by Bloomberg. The 78 buyers lagged behind the MSCI World Index by a median of 13 percentage points in the three years after completing the transactions, falling 21 percent, the data show.




With takeovers climbing to the highest level in four years and the potential buyout of Dell Inc. (DELL) stoking optimism for a further acceleration, this month’s departure of Rio Tinto Group’s chief executive officer after a $14 billion writedown provided the latest reminder that the biggest mergers often destroy value. Acquirers typically spend too much because they overstate the importance of expanding the size of their companies, according to Warren Buffett, the world’s most successful investor.

“Large deals are flashy and they get people’s attention,” said Scott Rostan, who once analyzed mergers at Merrill Lynch & Co. and now runs New York-based Training the Street, giving instruction on takeovers to new hires at banks. “But the large, transformational deals are really hard to pull off. Typically you have to pay a big price to convince the seller. Synergies are very hard to realize. There may be cultural differences. Put that all together and you’ve got a recipe for disaster.”

More Deals
As the pace of deals has increased -- with more than $700 billion announced in the fourth quarter, the most since Lehman Brothers Holdings Inc.’s collapse sent global markets into turmoil in September 2008 -- reminders of past transactions gone bad keep cropping up.

Rio Tinto, the world’s second-largest mining company, said this month that CEO Tom Albanese quit and the value of his purchases would be written down by about $14 billion. Those include the $43 billion acquisition of Alcan Inc. in 2007.

When announced, Rio Tinto said adding Alcan would create a “new global leader” in the aluminum industry. Speaking to Bloomberg Television in February 2008, Albanese said, “We have efforts under way to streamline all the businesses, and I think we’re doing quite a good job.” The deal soured when metal prices plunged during the global financial crisis that worsened in 2008.

HP Overpays
Hewlett-Packard Co. (HPQ), which fetches a quarter of the $128 billion market value it had in April 2010, has been battered by its takeover strategy. In November, the company said it overpaid for Autonomy Corp. because of fraud, boosting last year’s deal- related writedowns to $18 billion.

Hewlett-Packard’s stock market value also slumped at the end of 2012 to less than the $31 billion it spent during a five- year takeover binge. An earlier transaction, the $17.6 billion purchase of Compaq Computer Corp. a decade ago, got Hewlett- Packard further invested in the low-margin personal computer industry.

“Of the decisions CEOs make, doing a big deal is the riskiest possible one in most instances,” Pavel Savor, an assistant professor of finance at the University of Pennsylvania’s Wharton School in Philadelphia who has published research on M&A, said in a phone interview. “There are potentially detrimental consequences if it doesn’t work out. HP is a great example.”

Dell’s Discussions
Dell is in talks to be taken private in what would be the first leveraged buyout to exceed $20 billion since 2007, according to people with knowledge of the matter. Founder Michael Dell is seeking majority control of the company through a deal that would combine his 15.7 stake with as much as $1 billion of his personal funds, people familiar with the matter said this week.

The history of the biggest transactions shows buyers should be wary. The Bloomberg study of company takeovers exceeding $20 billion showed that the majority of the acquirers’ stocks declined in the three years after the deals closed. Transactions involving private equity firms or multiple buyers were excluded.

Pfizer, the world’s largest drugmaker, tumbled about 22 percent in the three years after completing its purchase of Pharmacia in 2003, a transaction valued at $64 billion when announced. Pfizer lagged behind the MSCI World Index of stocks in developed markets by more than 90 percentage points over that span, the worst underperformance among the 78 large deals analyzed, the data show.

Smaller Takeovers
Pharmacia gave Pfizer the pain-killing medicines Celebrex and Bextra. Sales (PFE) of the first never fully recovered after being cut in half when a similar-acting drug was recalled, while Bextra was pulled from the market two years later.

Though Pfizer did beat the MSCI World Index after spending $64 billion on Wyeth in 2009, CEO Ian Read said yesterday that its acquisition emphasis is now on smaller, “bolt-on” deals. He also said Pfizer may consider dividing the branded medicines and generic products units into separate businesses.

Sprint and Nextel promised that their merger, valued at $41 billion when announced, would help the companies compete with Verizon Wireless and Cingular Wireless LLC, the operator now owned by AT&T Inc. Sprint tumbled more than 60 percent in the three years following the deal’s closing in August 2005. The union left the company with incompatible networks, a shrinking customer base and five years of net losses.

Chrysler, Cerberus
Germany’s Daimler-Benz agreed to buy Chrysler in 1998 for $43 billion, which at the time the largest foreign takeover of a U.S. company, according to data compiled by Bloomberg. While shares of the new DaimlerChrysler AG initially rallied, they were down about 39 percent three years after the transaction’s completion, losing to the MSCI index by 32 percentage points.

The company ended the nine-year investment in the money- losing Chrysler business in 2007 when it handed control of the carmaker to private equity firm Cerberus Capital Management LP.

While Rio Tinto’s stock slid just 3 percent in the three years after it completed the Alcan deal in 2007, it’s fallen 20 percent through yesterday. About a year after closing the transaction, Rio Tinto hit its peak market capitalization of $206 billion, versus just $110 billion yesterday.

JDS Uniphase (JDSU) Corp., a network-equipment maker now valued by the stock market at $3 billion, generated one of the biggest writedowns in history. It traded for more than $120 billion in 2000 when the technology-bubble peaked. Four months after the Nasdaq Composite Index reached a record high that year, JDS Uniphase agreed to buy SDL Inc. for $36 billion. In 2001, its writedowns stemming from several deals exceeded $50 billion.

Swept Up
“When companies make these large acquisitions, that’s usually a sign that a bubble has reached a peak because it’s finally swept everyone up,” Jeff Matthews, the Naples, Florida- based author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett,” said in a phone interview. “That’s what happened with Rio Tinto. It seemed like a good idea at the time.”

Representatives of Rio Tinto, Hewlett-Packard, Pfizer, Sprint and Daimler declined to comment on the deals and shareholder losses. Jim Monroe, a spokesman at JDS Uniphase, didn’t return a phone call seeking comment.

One reason large mergers often disappoint is that the buyers overpay and fail to meet goals for cost savings, said Donna M. Hitscherich, a senior lecturer at Columbia Business School in New York and a former investment banker with JPMorgan Chase & Co.

Nextel ‘Mistake’
Sprint forecast $12 billion in synergies from its merger with Nextel. In an interview with GigaOm last month, Dan Hesse, who became Sprint’s CEO two years after the transaction closed, called the Nextel deal “a mistake” and said the synergies never materialized.

“You should only pay the last marginal dollar that you have to pay to win,” Hitscherich said in a phone interview. “If you pay more than something is worth, you have to make that up somehow, and you make that up in this idea of synergies,” she said. “The problem is, these synergies that you thought about maybe don’t materialize at all or don’t materialize on the time frame that you envisioned.”

Other megamergers worked out for the buyers, based on their stock prices three years after the deals closed. Zeneca Group Plc bought Astra AB for $30 billion. By April 2002, shares of AstraZeneca Plc, now the U.K.’s second-biggest drugmaker, had risen by a third, while the MSCI index slid 21 percent, the data show.

Biggest Brewer
Three years after InBev NV’s $61 billion takeover of Anheuser-Busch Cos. in 2008 created the world’s biggest brewer, shares of Anheuser-Busch InBev NV more than doubled and beat the MSCI index by 100 percentage points, data compiled by Bloomberg show. The company is now seeking regulatory approval for another big acquisition: Mexico’s Grupo Modelo SAB, the maker of Corona, for $17 billion.

Buffett’s takeover strategy at Berkshire Hathaway Inc. (BRK/A), which helped make him the world’s fourth-richest person, provides a guide for how to do deals correctly, Matthews said. Instead of tinkering with acquired businesses or melding them with already owned units, Buffett tends to leave them alone, letting managers keep doing what drew him to the business in the first place. The only difference: the cash they generate is sent to Berkshire headquarters for Buffett to reinvest.

The mistake many other acquirers make is paying too much, overemphasizing the need to expand and exaggerating their ability to turn troubled businesses around, Buffett has said over the years, including in Berkshire’s 1981 annual report.

Toads, Princesses
“Many managements apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad’s body by a kiss from a beautiful princess,” he wrote in that year’s letter to shareholders. “Consequently, they are certain their managerial kiss will do wonders for the profitability of” an acquired company.

Buffett didn’t respond to a request for comment sent to an assistant.

In the annual report last year, Buffett reiterated that the amount paid is key, saying, “what is smart at one price is dumb at another.” Berkshire offered to buy exchange operator NYSE Euronext last year, two people familiar with the matter said this week, saying Buffett’s firm was the entity referred to as “Company A” in a filing. IntercontinentalExchange Inc.’s Jan. 28 document said Company A offered less than ICE.

“Buffett’s thinking about price first, foremost and always,” said Matthews, a Berkshire shareholder whose most recent book on the investor is titled “Warren Buffett’s Successor: Who It Is and Why It Matters.” Some acquirers “tend to justify the price they’re going to pay based on intangibles like synergies. There’s a lot of emotion involved, and not a lot of rationality. Buffett doesn’t do that. And one thing he’s got on his side is being able to say no.”

Berkshire Hathaway Azionisti Italiani
 
Berkshire Buys Greensboro News & Record as Buffett Bets on Media
Berkshire Hathaway Inc. bought the Greensboro News & Record from Landmark Media Enterprises as the billionaire investor’s firm extends a bet on community newspapers.

The newspaper has daily circulation of 58,000, and 86,000 on Sunday, the media unit at Omaha, Nebraska-based Berkshire said today in an e-mailed statement that didn’t disclose terms.
 
Buffett Gets $1.8 Billion in Investment Assets From Cigna

Berkshire is taking on as much as $4 billion in liabilities from Cigna Corp. (CI) as the third-biggest U.S. health insurer seeks to reduce risk from death-benefits and retirement products.

Berkshire gets $1.8 billion in investment assets as a part of the deal, according to a statement yesterday from Bloomfield, Connecticut-based Cigna. The health insurer will also fund the deal with $100 million in cash and an estimated $300 million tax benefit.



Cigna CEO David M. Cordani, seen here on March 14, 2012, said last month that his company was ready to get rid of its death-benefits unit, which was closed to new business in 2001.

Buffett, 82, and his reinsurance chief Ajit Jain have assumed obligations from insurers seeking to cut risk or narrow their focus. The contracts give Berkshire’s billionaire chairman and chief executive officer more funds to invest and make acquisitions at the firm he’s built from a failing textile maker into a company with more than 70 operating units.

Cigna investors have been “waiting on this for a long time, so I imagine the reaction to it will be positive,” David Windley, a Jefferies & Co. analyst in Nashville, Tennessee, said in a phone interview.

The health insurer climbed 2.8 percent to $60 after the close of normal trading in New York yesterday and has advanced 34 percent in the past year. Omaha, Nebraska-based Berkshire climbed 21 percent in the same period.

Insurers Retreat

Investors including Leon Black’s Apollo Global Management LLC and Guggenheim Partners LLC have been assuming assets and liabilities tied to annuities as insurers retreat from the business. Declining interest rates have made guarantees embedded in the products more costly and weighed on earnings at companies including Hartford Financial Services Group Inc. (HIG) and Genworth Financial Inc.

Buffett has used insurance float, or the premiums collected before paying claims, to fuel growth at Berkshire over the past four decades. Jain has helped raise those funds, which totaled $72 billion at the end of September, by cutting deals with firms including American International Group Inc. and CNA Financial Corp. to assume asbestos liabilities and sell protection for the costliest natural disasters.

Life insurers took on what Buffett has called an “ungodly” amount of risk and accumulated liabilities as Treasury yields dropped below 2 percent, making it harder to generate returns to cover the obligations.

Cigna CEO David M. Cordani said last month that his company was ready to get rid of its death-benefits unit, which was closed to new business in 2001. Costs for annuities fluctuate with interest rates and the uncertainty has been a drag on Cigna’s stock, Windley said.

Earnings Forecast

Buffett is assuming liabilities from units that have about 435,000 active policies, down 10 percent over 2012, Cordani said yesterday on a conference call. The sale will have no impact on Cigna’s earnings forecast this year or its capital deployment plans, said Chief Financial Officer Ralph Nicoletti. Cigna expects to finish its payments to Berkshire “well before the end of 2013,” he said.

Cigna said it will take a $500 million after-tax charge in the first quarter tied to the transaction, according to the statement.

Bank of America Corp. (BAC) was Cigna’s financial adviser and Skadden, Arps, Slate, Meagher & Flom LLP provided legal advice.

Berkshire Hathaway Azionisti Italiani
 
Munich Re: profitti 2012 balzano a 3,2 mld di euro, dividendo proposto a 7 euro

Finanzaonline.com - 5.2.13/08:53

Profitti trimestrali superiori alle attese e revisioni al rialzo del dividendo annuale per Munich Re. Nel quarto trimestre gli utili del gruppo tedesco sono scivolati a 480 milioni contro i 630 milioni di un anno fa, ma sono stati superiori alle attese del mercato pari a 448,3 milioni. Per il 2012 il gruppo teutonico ha registrato un utile di 3,2 miliardi di euro dai 710 milioni del 2011. Il riassicuratore proporrà un dividendo a 7 euro da 6,25.
 
Buffett’s Moody’s Stake May Have Plunged on S&P Lawsuit

Berkshire Hathaway Inc., owner of the largest stake in Moody’s Corp., may have lost almost $300 million on the holding this week as shares of the credit-ratings company plunged.

Moody’s, the second-biggest provider of credit ratings, dropped 19 percent through yesterday after larger rival Standard & Poor’s said on Feb. 4 that it could face a U.S. lawsuit over inflated mortgage-bond ratings. Omaha, Nebraska-based Berkshire held 28.4 million Moody’s shares, or about 13 percent of the firm, as of Sept. 30, according to data compiled by Bloomberg.

Berkshire remained Moody’s biggest shareholder even as Buffett, 82, pared his stake from 48 million shares in 2009. He told the Financial Crisis Inquiry Commission in 2010 that Moody’s wasn’t alone in missing the collapse of the housing market and that he invested in the business because of the pricing power it gets from its “natural duopoly” with S&P, a unit of McGraw-Hill Cos.

“He believes it’s a good business with a wide economic moat and he’s held onto the position for quite some time,” Tom Lewandowski, an analyst at Edward Jones & Co., said yesterday in a phone interview. He generally looks at such occasions as opportunities “to increase his stake.”

Moody’s tumbled $10.26 this week, the biggest two-day drop in almost four years, closing yesterday at $45.09 in New York. If Berkshire continues to own the same number of shares that it did at the end of September, the value of its holding in Moody’s dropped by $291.5 million. The shares still have climbed 17 percent in the past 12 months.

Financial Crisis
The U.S. is seeking as much as $5 billion in penalties from New York-based McGraw-Hill as punishment for inflated credit ratings that Attorney General Eric Holder said were central to the financial crisis. While Moody’s wasn’t sued, a victory by the government would spur other lawsuits, according to Robert Piliero, a lawyer at Butzel Long in New York who’s worked on structured-finance litigation.

Michael Adler, a spokesman for New York-based Moody’s, declined to say whether the company may face a U.S. lawsuit. Buffett, Berkshire’s chairman and chief executive officer, didn’t respond to a request for comment sent to an assistant about whether the S&P lawsuit has changed his view of Moody’s.

Buffett, in a 2010 Bloomberg Television interview ahead of a scheduled appearance before the FCIC, said Moody’s had lost some of its competitive advantage.

‘Bulletproof Franchise’
“What was once a bulletproof franchise may not be bulletproof,” the billionaire said at the time. “It’s still quite a franchise.”

Moody’s made the same error as competitors and investors in assuming that housing prices couldn’t fall nationwide, Buffett said. “They made big mistakes, but who didn’t during the housing bubble?”

Other top Moody’s shareholders include Vanguard Group Inc., ValueAct Holdings LP and Capital Group Companies Inc., which also was the largest owner of McGraw-Hill as of Sept. 30, according to data compiled by Bloomberg.

McGraw-Hill shares plunged 23 percent this week, wiping out almost $4 billion of market value.

David Einhorn, who runs the New York-based Greenlight Capital LP hedge fund, said in a May 2009 speech that he was betting against Moody’s because ratings are “shunned” by investors. Einhorn, 44, declined to comment for this story.

Berkshire stock has gained 9.5 percent this year as Buffett’s larger equity bets rallied. He has accumulated stakes exceeding $13 billion in both Coca-Cola Co. and International Business Machines Corp., and each stock has advanced more than 5 percent since Dec. 31.
 
The Coca-Cola Company Reports Full-Year and Fourth Quarter 2012 Results

strong 4% global volume growth for the full year
Worldwide brand Coca-Cola growth of 3% for the full year
Volume and value share gains continue in nonalcoholic ready-to-drink beverages

Full-Year and Fourth Quarter 2012 Highlights

Strong full-year global volume growth of 4%, in line with our long-term growth target and led by brand Coca-Cola, up 3%. Global volume grew 3% in the quarter, driven by international volume growth of 4% and North America volume growth of 1%.
Full-year reported net revenues grew 3% and comparable currency neutral net revenues grew 6%, in line with our long-term growth target. Fourth quarter reported net revenues grew 4% and comparable currency neutral net revenues grew 5%.
Full-year reported and comparable currency neutral operating income both grew 6%, in line with our long-term growth target. Fourth quarter reported operating income grew 12% and comparable currency neutral operating income grew 14%.
Currency was a 3% headwind on comparable net revenues and a 5% headwind on comparable operating income for the full year.
Full-year reported EPS was $1.97, up 6%, and comparable EPS was $2.01, up 5%. Fourth quarter reported EPS was $0.41, up 14%, and comparable EPS was $0.45, up 15%.
Full-year cash from operations was up 12%.
Evolution of global bottling system continues, with bottler-led consolidation announced in Japan and Brazil, and a majority interest in our Philippine bottling operations sold to Coca-Cola FEMSA (transaction completed in January 2013).
 
E finalmente.. ecco l'elefante :

Usa: Buffett e 3G Capital comprano ketchup Heinz per 28 mld (RCO)


La maggiore operazione mai registrata in campo alimentare (Il Sole 24 Ore Radiocor) - Milano, 14 feb - Passa di mano la Heinz, produttrice fra gli altri del celebre ketchup

Berkshire Hathaway, la finanziaria di Warren Buffett, e 3G Capital hanno raggiunto un accordo per acquistare il gruppo alimentare per 28 miliardi di dollari. Si tratta della maggiore operazione di accorpamento mai registrata nell'industria alimentare americana. Una volta completata la vendita, la Heinz manterra' il suo quartier generale a Pittsburgh. Gli azionisti del gruppo inoltre riceveranno 72,50 dollari per ogni titolo detenuto. L'operazione verra' finanziata con fondi provenienti dai due acquirenti oltre con linee di credito messe a disposizione da Jp Morgan e Wells Fargo. Corrado Poggi cop-Y-

Berkshire Hathaway Azionisti Italiani
 
H.J. Heinz Company Enters Into Agreement to Be Acquired by Berkshire Hathaway and 3G Capital

H.J. Heinz Company Enters Into Agreement to Be Acquired by Berkshire Hathaway and 3G Capital
 Heinz shareholders to receive $72.50 per share in cash
 Transaction valued at $28 billion, largest ever in food industry
 Following the transaction, Heinz will remain headquartered in Pittsburgh as a private company
PITTSBURGH, OMAHA and NEW YORK – February 14, 2013 – H.J. Heinz Company (NYSE: HNZ) (“Heinz”) today announced that it has entered into a definitive merger agreement to be acquired by an investment consortium comprised of Berkshire Hathaway and 3G Capital.
Under the terms of the agreement, which has been unanimously approved by Heinz’s Board of Directors, Heinz shareholders will receive $72.50 in cash for each share of common stock they own, in a transaction valued at $28 billion, including the assumption of Heinz’s outstanding debt. The per share price represents a 20% premium to Heinz’s closing share price of $60.48 on February 13, 2013, a 19% premium to Heinz’s all-time high share price, a 23% premium to the 90-day average Heinz share price and a 30% premium to the one-year average share price.
“The Heinz brand is one of the most respected brands in the global food industry and this historic transaction provides tremendous value to Heinz shareholders,” said Heinz Chairman, President and CEO William R. Johnson. “We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz. With Heinz stock recently at an all-time high and 30 consecutive quarters of organic topline growth, Heinz is being acquired from a position of strength. As a private enterprise, Heinz will have an opportunity to drive further growth and advance our commitment to providing consumers across the globe with great tasting, nutritious and wholesome products,” added Johnson.
Warren Buffett, Chairman and CEO of Berkshire Hathaway said, “Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products. Their global success is a testament to the power of investing behind strong brand equities and the strength of their management team and processes. We are very pleased to be a part of this partnership.”
Alex Behring, Managing Partner at 3G Capital said, “We have great respect for the Heinz brands and the strong business that management and its employees operate around the world. We approached Heinz to explore how we might work together to expand the value of this storied brand. We fully recognize Heinz’s value and heritage and look forward to working together with Heinz’s employees, suppliers and customers as we invest in and support the company’s ongoing global growth efforts.”
Understanding the need to preserve Heinz’s values, heritage and community connections, Berkshire Hathaway and 3G Capital have pledged to maintain Pittsburgh as its global headquarters, and to fulfill and continue its philanthropic support of community initiatives and related investments.
The transaction will be financed through a combination ocash provided by Berkshire Hathaway and affiliates of 3G Capital, rollover of existing debt, as well as debt financing businesses across a variety of industries, including numerous iconic brands. 3G Capital is a
global investment firm focused on long-term value creation, with a particular emphasis on
building and expanding great brands and businesses.
The transaction is subject to approval by Heinz shareholders, receipt of regulatory approvals
and other customary closing conditions, and is expected to close in the third (calendar) quarter
of 2013that has been committed by J.P. Morgan and Wells Fargo.

E tra i marchi acquistati... indovina un po'.. ci sono anche i biscotti Plasmon !

Berkshire Hathaway Azionisti Italiani
 
Ultima modifica:
Berkshire Joins 3G Capital to Buy Heinz in $23 Billion Deal

Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital agreed to buy HJ Heinz Co. in a deal for about $23 billion as the billionaires increased their bets on consumer products.

The buyers will pay $72.50 a share, compared with yesterday’s closing price of $60.48, according to a statement today. Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks, Buffett told CNBC. The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about $28 billion including debt, according to the statement.

Heinz benefits from “very powerful consumer goodwill in the developed markets and a very early start in China and India, two of the largest developing markets,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner said in a phone interview. “It will not be hard to service the debt.”

Buffett, 82, has been seeking deals after the cash pile at Omaha, Nebraska-based Berkshire climbed to more than $45 billion. He has previously wagered on consumer products through equity investments in Coca-Cola Co. and he helped finance Mars Inc.’s purchase of chewing gum maker Wm. Wrigley Jr. Co. Brazil’s Lemann, 73, is worth about $19 billion based on holdings in Anheuser-Busch InBev NV and Burger King Worldwide Inc., according to the Bloomberg Billionaires Index.

Emerging Markets
Heinz shares climbed to $72.45 in early trading at 9:23 a.m. in New York. Berkshire B shares advanced 13 cents to $98.10.

The condiment maker, led by Chief Executive Officer Bill Johnson since 1998, had gained 17 percent in the past 12 months as it boosted sales in developing economies. Heinz in November said fiscal second-quarter sales in emerging markets rose 13 percent, excluding the effects of foreign currency fluctuations and acquisitions or divestitures.

Heinz elected billionaire Nelson Peltz to the board in 2006 following a six-month proxy fight. Peltz had been pushing the company to trim costs and sell assets to boost the ketchup maker’s share price.

3G will oversee the operations of the business, Buffett told CNBC, praising the investment company’s record with Burger King, which it acquired in 2010 and then took public last year. He said he expects Johnson to remain in charge and that 3G will have the final say.

“Any partnership where I don’t have to do the work is my kind of partnership,” Buffett said. Buffett is worth more than $50 billion, according to the Bloomberg Billionaires Index.
Heinz will retain its corporate headquarters in Pittsburgh, according to the statement. The company traces its roots back to 1869, when Henry John Heinz and neighbor L. Clarence Noble began selling grated horseradish, according to Heinz’s website. The company introduced its famous Tomato Ketchup
‘Strong Brand’
The deal is the largest ever in the food industry, the companies said. The buyers are paying about 14.6 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That compares with the median of 7.6 times Ebitda in a survey of more than 100 comparable deals worldwide.

“Buffett’s affection for strong brand names” make the company a good fit for his portfolio, said Christopher Growe, an analyst at Stifel Nicolaus & Co. “Heinz’s strong margins support robust free-cash flow generation.”

There have been more than $280 billion announced deals this year, according to data compiled by Bloomberg. That’s 26 percent more than in the same period a year earlier.

JPMorgan, Wells Fargo
Centerview Partners LLC and Bank of America Corp. acted as financial advisers to Heinz, while Davis Polk & Wardwell LLP provided legal counsel to the ketchup maker. The Heinz board committee that approved the deal got financial advice from Moelis & Co. and legal counsel from Wachtell, Lipton, Rosen & Katz.

Lazard Ltd. served as lead financial adviser to the investment group. JPMorgan Chase & Co. and Wells Fargo & Co. also gave financial advice, and the two banks have committed debt financing, according to the statement. Kirkland & Ellis LLP provided legal counsel to 3G Capital, while Munger, Tolles & Olson LLP is acted as legal adviser to Berkshire Hathaway
 
Buffett Cash Targets General Mills to Grainger: Real M&A

Buffett’s Berkshire Hathaway Inc. has about $15 billion in cash left for deals -- a figure that grows monthly -- after committing $12.1 billion for Heinz. With Buffett saying yesterday his desire for “elephants,” or large acquisitions, remains unsatisfied, the world’s fourth-richest person could set his sights next on targets from Cheerios maker General Mills Inc. to hardware supplier W.W. Grainger Inc.

Buffett has built Berkshire into a holding company with $246 billion in market value through acquisitions of railroads, insurers, newspaper publishers, clothing companies and now ketchup. General Mills, with iconic food brands from Yoplait yogurt to Pillsbury cookie dough, and Grainger, which sells power tools and office equipment, are among 28 U.S. companies between $15 billion and $35 billion in market value that meet the takeover criteria in Berkshire’s annual report, according to data compiled by Bloomberg. Hershey Co., the maker of Kisses and Reese’s candies, also makes the cut.

“He certainly has the capital to do another deal,” Matt McCormick, who helps oversee $7.5 billion as a money manager at Cincinnati-based Bahl & Gaynor Investment Counsel Inc., said in a telephone interview. “He likes companies in this realm of name-brand products that have economic moats, consistent earnings, strong free cash flow and a reasonable valuation.”

Heinz Ketchup
Buffett, the 82-year-old chairman and chief executive officer of Berkshire, didn’t respond to an e-mailed request for comment sent to an assistant.

Berkshire and 3G Capital, the New York investment firm backed by Brazilian billionaire Jorge Paulo Lemann, will pay $72.50 a share for Heinz, 20 percent more than the stock’s closing level on Feb. 13.

In addition to cash from Omaha, Nebraska-based Berkshire, the purchase will be financed with cash from 3G affiliates, plus the rollover of existing debt. The deal is valued at about $28 billion including debt, according to yesterday’s statement.

Buffett, in the statement, cited Heinz’s brands, management and “strong, sustainable growth potential.” The Pittsburgh- based maker of Heinz ketchup, Ore-Ida frozen French fries and other foods had sales increases in four of the past five fiscal years and is projected by analysts to post record annual revenue and profit for the period ending in April, according to data compiled by Bloomberg.

‘Right Brand’
“Buffett’s willing to pay a premium for the right brand,” Walter Todd, who oversees about $950 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a phone interview. “It’s a combination of what he looks at financially and also qualitatively.”

Buffett told CNBC yesterday that Berkshire’s cash balance was about $47 billion at the end of 2012, up from $37.3 billion a year earlier. He prefers to keep $20 billion in reserve, leaving about $15 billion following the Heinz transaction, which a filing yesterday shows is costing Berkshire $12.1 billion.

“I’m ready for another elephant,” he said during the CNBC interview yesterday. “If you see any walking by, just call me.”

“The cash builds from month to month, so the gun is always getting reloaded,” Buffett said.

Buffett usually prefers “simple” businesses, “consistent” earning power and “good” returns on equity while employing little or no debt, according to his annual report.

Takeover Criteria
He has shifted his takeover strategy as Berkshire has grown to focus on “capital intensive businesses.” So-called value investors such as Buffett also purchase companies when their stock prices are low by historical standards compared with earnings.

There are 28 U.S. companies with equity values between $15 billion and $35 billion that had capital expenses accounting for at least 10 percent of net fixed assets; generated an average increase in return on invested capital in the past five years that ranked in the top 50 percent; sold for a lower price- earnings ratio than the average stock in the U.S.; and had a return on equity last year exceeding 10 percent, data compiled by Bloomberg show.

General Mills would be a fitting takeover for Buffett after the Heinz purchase because both companies have recognizable brands and sell their products in many of the same stores, said Jeff Matthews, a Berkshire shareholder and Naples, Florida-based author of “Warren Buffett’s Successor: Who It Is and Why It Matters.”

General Mills
“General Mills makes a lot of sense,” Matthews said in a phone interview. “It’s another kind of sleepy, Heinz-type business that has a lot of potential. The distribution channels really overlap.”

The company increased its return on invested capital -- a measure of how profitably a company uses its debt and equity -- by an average of 6.2 percent over the past five years, data compiled by Bloomberg show. General Mills also generates more free cash flow relative to its stock price than 94 percent of the world’s largest food manufacturers, the data show. It has a market value of almost $29 billion and net debt of about $7.6 billion.

General Mills would rival the takeover of Burlington Northern Santa Fe Corp. as Berkshire’s biggest deal.

Kirstie Foster, a spokeswoman for Minneapolis-based General Mills, said the company doesn’t comment on speculation.

Hershey Chocolate
Hershey, the $17.8 billion chocolate company founded in 1894, generated a return on invested capital of 28.6 percent in 2012, higher than all but about 5 percent of stocks in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. CEO John P. Bilbrey plans to boost annual sales to $10 billion by 2017, from $6.6 billion last year, and surpass Mars Inc. to become North America’s biggest confectionary maker.

Berkshire already owns a candy maker, See’s Candies, and helped finance the purchase of Wm. Wrigley Jr. Co. by Mars in 2008. Last year, Buffett praised the business model of turning commodity ingredients into premium-priced products.

“‘Buy commodities, sell brands’ has long been a formula for business success,” he wrote in his annual letter to shareholders last year. “It has produced enormous and sustained profits for Coca-Cola since 1886 and Wrigley since 1891.”

Controlling Trust
The Hershey, Pennsylvania-based company is controlled by a trust that benefits the Milton Hershey School, which has a majority of the voting rights. After Hershey terminated a sale process in 2002, Pennsylvania passed a law allowing the state’s attorney general to block a sale if it’s “unnecessary for the future economic viability of the company,” according to Hershey’s annual report.

Jeff Beckman, a spokesman for Hershey, said the company doesn’t comment on speculation.

Consumer packaged-goods companies are appealing because they can weather a weak economy, said Barry James, who helps oversee $3.5 billion as president of James Investment Research in Xenia, Ohio.

“They’re not going to be as dependent on rapid economic growth to sustain them,” said James, whose Golden Rainbow Fund beaten 94 percent of rival funds in the last five years.

Consumer stocks including Campbell Soup Co., General Mills and J.M. Smucker Co. advanced yesterday after the Heinz deal was announced. General Mills ended the day at $44.31, its highest closing price since at least 1980.

Grainger’s Hardware
Buffett’s investment in Heinz won’t spark a stampede for deals in the industry, said James Neely, a Cleveland-based partner at consulting firm Booz & Co. who advises consumer products companies on mergers.

“The next deal that he does is just as likely to be in a very different sector,” he said in a phone interview.

Grainger, the seller of hardware, office supplies and related equipment that posted record revenue and net income last year, is another potential target. The $15.7 billion company earned about 13 cents in operating profit for every dollar of sales in the latest 12 months, more than triple the median 3.9 percent margin among industrial supply distributors, according to data compiled by Bloomberg.

“Grainger would fit his criteria,” Michael Mullaney, chief investment officer at Boston-based Fiduciary Trust Co., which manages $9.5 billion, said in a phone interview. It’s “easy to understand what they do. Grainger is a very good service-oriented company. It’s well-run.”

Joseph Micucci, a spokesman for Lake Forest, Illinois-based Grainger, declined to comment.

Berkshire already owns Campbell Hausfeld, a maker of home improvement products such as paint sprayers, and Iscar Metalworking Cos., which makes metal cutting tools.

“I’m sure he’ll pull off something else down the road,” Matthews said. “He’s generating about $1 billion of cash a month. He’s looking for something that’s going to be a good bet in the long run. You have to be prepared for anything from Warren Buffett

List of Companies:
Market Capitalization from $15 Billion to $35 Billion
Capital Expenditures / Net Fixed Assets > 10%
5-Year Average Growth in ROIC in Highest 50%
P/E Ratio < Average Company Value in Home Market
Return on Common Equity > 10%
*Excludes Banks, Brokerages, Asset Managers, Technology,
Biotechnology Companies

Aetna Inc.
Agilent Technologies Inc.
Capital One Financial Corp.
Cardinal Health Inc.
CBS Corp.
Cigna Corp.
Cummins Inc.
Estee Lauder Cos.
FedEx Corp.
General Mills Inc.
Hershey Co.
Johnson Controls Inc.
Lockheed Martin Corp.
Marathon Petroleum Corp.
McKesson Corp.
Mosaic Co.
Northrop Grumman Corp.
Paccar Inc.
Plains All American Pipeline LP
Public Service Enterprise Group Inc.
Raytheon Co.
Time Warner Cable Inc.
TJX Cos.
VF Corp.
Viacom Inc.
Williams Partners LP
W.W. Grainger Inc.
Yum! Brands Inc.

Berkshire Hathaway Azionisti Italiani
 
General Mills è una gran bella azienda e l'ho seguita spesso.
Ma penso che sarebbe più un target ideale per Nestlè con la quale condivide la Ceral Worlwide leader mondiale insieme a Kellog's nei cereali.
 
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