Omaha March 3, 2015-
Warren Buffett’s Berkshire Hathaway today announced that Cupertino California based Apple made official an uninvited hostile takeover offer for all of the outstanding stock in Berkshire Hathaway. Just after Buffett and Berkshire released their annual and widely read letter to the shareholders of Berkshire, Apple served notice of their intention to acquire all of the outstanding stock of Berkshire Hathaway via tender offer. Mr. Buffett said, “at first I thought it was a joke and a bad one but I’ve asked my secretary to check with the SEC to confirm. We’ll know if they’re serious if we discover they have filed a schedule “TO” indicating a tender offer. If as has been rumored, they already own more than 5% of our outstanding stock they’ll have had to have filed a “13D” so we’re checking it out. These are two very different businesses and don’t employ the same long or short term strategies so I’m just not sure what they’re up to. If true, we won’t take this lying down – that much I can tell you. I called Tim Cook but haven’t heard back from him as of yet”.
Reached in Cupertino for comment, Apple chief Tim Cook responded that,”Apple represents quality in the products we make and that won’t change. We specialize in consumer, business and education hardware and software and we want to remain focused on that core mission. Berkshire is a complementary organization to Apple in that we have never been very good at managing the huge cash flow that streams into our coffers daily. If one of our goals is to maximize shareholder returns, we need to do more than churn out great products and satisfy our customers. We need to optimize the returns we receive from investing all the cash that is excess to our operational needs. We got together in a large boardroom to hash out how we could build up our financial asset management division. As we did recently in many other areas of the company, we look for the best talent out there in the market – and this is important – whether they appear to be available or not. And believe me there is some great talent out there but the name that kept coming up was Warren Buffett. But it’s not just Warren and Charlie – it’s their entire organization that we have great respect for. So we wondered out loud – could we duplicate how they allocate capital, what they invest in and why? Possibly we thought. But then someone in the room said – and I don’t remember who – why don’t we just buy Berkshire and funnel all our excess capital to Warren & Co.? This way we’d have access to it if a large tech acquisition became available but it would be earning substantially more than the 1 or 2% we’re getting now. Of course we considered that Warren might rather remain independent and we wanted to play nice, but, we remembered that people writing about Warren indicated over and over again that he could be fair in his business dealings but opportunistic as well. So we felt that our offer to buy would need to be a solid business-oriented offer and we’d just move forward if we could get financing for the purchase as most of our $180 Billion dollar reserve is currently overseas. That’s when it hit us – we didn’t need to move our overseas cash here to buy Berkshire. Berkshire was already sitting on liquid investments in cash and stock of about $150 Billion. Their total market cap is about $350 Billion so we could use the currently held Berkshire cash and stocks as down payment and collateral for financing the balance of the acquisition. We thought Berkshire was the kind of company Warren would look to buy if he didn’t already own it. It was time to snatch the pebble from the masters hand”. –slater.com©