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Strategies & Market Trends : Speculating in Takeover Targets
CTG 7.210-6.6%Feb 3 4:00 PM EST

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To: richardred who wrote (2748)3/21/2011 12:42:54 PM
From: richardred   of 6545
Buffett: Berkshire Hathaway Seeks More Acquisitions


DAEGU, South Korea—Berkshire Hathaway Inc. Chairman Warren Buffett said Monday that his investment vehicle is seeking further acquisitions following a $9 billion purchase of Lubrizol Corp. last week.

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Warren Buffett, center, with employees of Taegutec in Daegu on Monday.

"We're looking at a number of big businesses in Korea, the U.S., the U.K. We hope to find good companies wherever they may be. Basically, it's the bigger, the better," he said at a press conference.

The billionaire investor flew Sunday night into the manufacturing city of Daegu, about 300 kilometers southeast of Seoul, to attend a ground-breaking ceremony on Monday for a factory run by a Korean unit of Iscar Metalworking Cos, an Israeli maker of metal-cutting tools that is 80%-owned by Berkshire.

Mr. Buffett, in gray sweatpants and running shoes, arrived at the Daegu airport—his second visit to the city since 2007—on his private jet and was greeted by scores of citizens, politicians and business leaders and a city marching band. Some were holding banners welcoming him and others waved Korean and U.S. flags.

The 80-year-old investor cancelled a plan to visit Japan to speak at the opening ceremony of a new factory on Tuesday after the devastating earthquake, tsunami and nuclear crisis hit the country. Instead, he chose to meet with South Korean President Lee Myung-bak later Monday.

* Earlier: Why Buffett Just Spent $10 Billion

But he said the catastrophe in Japan won't derail the "economic future" of the country and said that he'll continue to maintain his investment in the world's third-largest economy.

"The nine-eleven in 2001…the horrible incident didn't change the future of the U.S. or the economic prospect of the U.S. I feel exactly the same way after what's happened in Japan. People in Japan have the same energy, they have the same desire to move on and the same resources to rebuild," he said. "So, I don't look at them differently from 10 days ago...Frequently, extraordinary events really create a buying opportunity."

Last week, Berkshire Hathaway said it will buy chemical maker Lubrizol for $9 billion, its latest expansion into the industrial sector, where Mr. Buffett has been seeking new avenues for growth.

The deal was unveiled about two weeks after Mr. Buffett wrote in his annual letter to shareholders that he was ready for another major acquisition. He wrote that he had his "elephant gun" loaded, and that his trigger finger was "itchy" for a new purchase.

Analysts expect Berkshire, with $38 billion in cash and cash equivalents at the end of 2010 and billions more expected to pile up this year, to make several more acquisitions as Mr. Buffett tries to grow the already massive conglomerate at a rate faster than the broader stock market.

Mr. Buffett said his investment isn't based on any particular sector or industry, but he isn't interested in electronics companies.

"I simply look for businesses, what I think I have some understanding of, what they might look like in five or 10 years. We're not looking at particular sectors. But I don't think I can bring on the table electronics companies. We have very few. We're likely to hold a very few in the future," he said.

Mr. Buffett said Berkshire Hathaway still holds a stake in Posco and some "small-cap" stocks in Korea. He added that the company is also looking at a number of companies in Korea for investment.

"We own in the area of 4% of Posco. It's an incredible steel company," he said. "We're looking at buying entire businesses in Korea. We're looking at buying large-cap businesses here. Korea has a number of large companies obviously. It's a hunting ground."

Berkshire Hathaway, which bought into Posco in 2006, currently owns about 4.5% of the company, according to the Korean steelmaker.

At a meeting with South Korean President Lee Myung-bak, Mr. Buffett described the country as a "promising market" and said he will introduce the success of South Korea at the next shareholders' meeting of his company.

Asked about the prospects for the U.S. economy, Mr. Buffett said the overall economy is recovering with the exception of the housing market and he expects the economy will "get better," according to Seoul's presidential office.

He said North Korea isn't a big threat for his company to invest in South Korea despite the escalation of tension on the peninsula.

"Certainly nothing has happened in that respect. In any way, it (North Korea) won't reduce my interest in investing in South Korea nor in expanding business we have here," he said.

Mr. Buffett has professed a preference for cash-generating businesses with little debt and a substantial share of the market in their sectors, large competitive advantages over rivals, and solid management that he can leave in place. He has said that acquisition targets need to have pretax earnings of at least $75 million.

Other Berkshire acquisitions have included the more than $26 billion purchase last year of railroad operator Burlington Northern Santa Fe; a $4 billion purchase of Iscar Ltd., an Israeli metalworking company, in 2006; a $4.8 billion purchase of the majority of Marmon Holdings, the vehicle of the Pritzker family which oversees manufacturing and service companies, in 2008; and smaller deals to buy Japanese toolmaker Tungaloy Corp., electronic-parts distributor TTI Inc. and power company PacifiCorp.
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