Buffett offers buyout to minority holders of partner Munger's Wesco Financial
Warren Buffett’s Berkshire Hathaway Inc. on Thursday said it would offer to buy out the minority shareholders of Pasadena-based Wesco Financial Corp., which already is 80.1% owned by Berkshire.
Wesco is headed by Buffett’s longtime business partner Charlie Munger.
Berkshire said in a filing with the Securities and Exchange Commission that it would offer Berkshire shares and/or cash for the 19.9% of Wesco shares outstanding. Berkshire proposed to pay Wesco’s book value per share, which was about $353 as of June 30. The total offer would be worth about $500 million.
Shares of Wesco -- which operates insurance, furniture-rental and steel service-center businesses -- surged $34.03, or 10.5%, to $358.78. Berkshire’s Class B shares were off 55 cents, or 0.7%, to $76.25.
Why would Berkshire bother buying out the rest of Wesco? Erik Holm at Dow Jones News Service suggests the move is part of Buffett's planning for succession:
Wesco shares rose an average of 5.1% a year in the 10 years ended June 30, trailing Berkshire’s 8.5% average annual gain in the period. By contrast, the Standard & Poor’s 500 index lost an average of 1.6% a year in the period.
The deal, if approved, would be another step toward preparing Berkshire for a new generation of leaders. Wesco is run by Berkshire Vice Chairman Charlie Munger, Buffett's 86-year-old second-in-command, who has been less involved in Berkshire's day-to-day operations in recent years.
While Munger hasn't announced plans to step aside, other senior people in the organization have. Mostly recently, 73-year-old Lou Simpson, who ran the investment operation at Berkshire-owned insurer Geico Corp., last week announced plans to retire.
Buffett, who serves as Berkshire's chairman, chief executive and head of investing, turns 80 next week.
-- Tom Petruno