How Warren Buffett Makes a Deal

 

By Shira Ovide

How quickly can Warren Buffett pull the trigger on a multi-million-dollar acquisition? Apparently just in the time it takes to ring his buddy, Charlie Munger.

Bloomberg News

Buffett’s Berkshire Hathaway announced last month a deal for the rest of Wesco Financial, a polyglot business in which Berkshire has held a stake for decades. According to an SEC filing on Monday detailing the background of the deal, Buffett began around August 18 considering a deal for the 19.9% stake in Wesco that Berkshire didn’t own.

Buffett then talked about his Wesco deal idea with Munger, his longtime investing partner and the CEO of Wesco. Munger said he would be “in favor of such a proposal,” according to the SEC filing. Within days – on Aug. 26 – Buffett had disclosed publicly his plans for a full takeover of Wesco. And a few days after that, Wesco’s board held a meeting to discuss Buffett’s proposed takeover.

That’s it. No fuss. No drama.

If you’re a student of these M&A documents, the “background of the merger” sections are typically long and winding reads packed with rival bidders, cold feet, hiring of multiple bankers and lawyers, and board meetings galore. (Read the J. Crew merger background, for example.) But Buffett just noted that Wesco is trading at a discount to book value, and maybe its shareholders “might appreciate the opportunity to consider a merger with Berkshire at book value,” as the Berkshire-Wesco SEC filing says.

It’s hard to imagine Berkshire will be able to operate in the same streamlined way when Buffett and Munger aren’t running the show anymore. Already, as our Journal colleagues have reported, there are several internal candidates under consideration to succeed Buffett as the Berkshire CEO. The 80-year-old Buffett has said he’d expect to split his current myriad duties into two positions, a CEO to oversee the Berkshire businesses such as Burlington Northern Santa Fe; and a chief investment officer to handle Berkshire’s stock and other investment holdings.

While two (or more) heads may be better than one, Berkshire may not be the same no fuss show anymore.