Buffett Ready for More Takeovers

Feb. 28, 2011
Increases share of Marmon Holdings

U.S. billionaire chief executive Warren Buffett said on Feb. 26 that he is "itchy" for more takeovers less than one year after his $26.5 billion purchase of the Burlington Northern Santa Fe Railway company.

In his annual letter to his Berkshire Hathaway shareholders, Buffett wrote that in 2011 "we will need both good performance from our current businesses and more major acquisition.

"We're prepared," said Buffett, 80, the third richest man in the world. "Our elephant gun has been reloaded, and my trigger finger is itchy."

The man known as the "Oracle of Omaha" also said his company will increase its share of Marmon Holdings Inc. Buffett bought a 60% stake in the company in 2007 from Chicago's Pritzker family for $4.5 billion. "We will soon increase our ownership in this company to 80% by carrying out our scheduled purchase of 17% of its stock from the Pritzker family. The cost will be about $1.5 billion. We will then purchase the remaining Pritzker holdings in 2013 or 2014."

Marmon, which has been owned by the Pritzker family since 1953, is a manufacturing and services group with more than 125 units whose products range from railroad tank cars to electrical wires. Buffett said that his company is "envisioning a year free of mega catastrophe in insurance and possessing a general business climate somewhat better than that of 2010, but weaker than that of 2005 or 2006."

Berkshire Hathaway reported that 2010 net income was up 61% compared to the previous year to $12.97 billion, and its per-share book value increased by 13%.

Buffett, widely seen as one of the most savvy investors in the United States, was bullish on the future of the U.S. economy. "Money will always flow toward opportunity, and there is an abundance of that in America," he wrote.

He said that much of his 2010 success was due to the Burlington Northern Santa Fe Railway acquisition, which he said has been "working out even better than I expected." Owning the railroad, he wrote, "will increase Berkshire's 'normal' earning power by nearly 40% pre-tax and by well over 30% after-tax."

Berkshire Hathaway also said that capital spending would rise sharply this year. "In 2011, we will set a new record for capital spending -- $8 billion -- and spend all of the $2 billion increase in the United States," Buffett wrote.

Buffet has said he aims to split his company's operating duties between a new chief executive and at least two investment managers. But the billionaire has no current plans to retire, and his letter to investors had no indication as to who his successor might be.

Copyright Agence France-Presse, 2011

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