Warren Buffett's Company Berkshire Hathaway Misses Out On $5B Acquisition Of Tech Data
- Posted on November 30, 2019
- Business
- By admin admin
Berkshire Hathaway is still sitting on a record pile of cash,
after its CEO and Chairman Warren Buffett was thwarted in his attempt to buy
Tech Data for $5 billion. Buffett's Berkshire missed out on the $5 billion
acquisition of Tech Data because it does not intend to counter with a higher
offer.
A week ago, Buffett said he bid $140 a
share, or a little over $5 billion excluding debt, for the Clearwater,
Florida-based Tech Data, according to CNBC. But the Oracle of Omaha lost out to
a competing bid by private-equity firm Apollo Global Management for $145 a
share, which values the company at about $5.14 billion. Apollo upped its
initial offer of $130 a share, or just over $4.77 billion after an unnamed
suitor -- Berkshire -- topped it, CNBC reported.
Tech Data, which had $37 billion in revenue last year, is a
global distributor of technology products and services, buying a wide range of
services from manufacturers like Apple, Cisco Systems and HP. It is the
No. 88 company on the Fortune 500 list of largest publicly traded companies and
employs more than 14,000 people worldwide.
According to Berkshire’s most recent
quarterly earnings report, Warren Buffett’s sprawling conglomerate has a
staggering $128.1 billion in cash and equivalents— a record amount — despite investing $10 billion in Occidental
Petroleum Corp. in exchange for 100,000 shares of stock.
Despite holding so much cash — "far beyond" the level
that Buffett and Vice Chairman Charlie Munger prefer — the company has struggled
to make any major acquisitions since 2016, citing that asking prices that are
too high. Rather, the company has repurchased about $700 million of its own
shares, this was an idea that was previously shunned by Buffett.
In May, Buffett told FOX Business’ Liz Claman that the company’s
cash pile expands by about $100 million per business day. At the time, he said
he was searching the world for new investment opportunities. “In terms of size,
there are probably a dozen countries in the world that should have some
companies that we would be interested in,” he said at the time.
Last year, in his annual letter to shareholders, Buffett blamed
the prices on a buying frenzy driven in large part by CEOs who are cheered on
by their boards. Once CEOs have a deal and asking price in mind, it’s difficult
to sway their opinions.
Be the first to comment!
You must login to comment