Warren Buffett reportedly loses big takeover battle
Warren Buffett didn’t become the world’s fourth-wealthiest person by getting outbid on deals.
The Oracle of Omaha reportedly made a recent takeover offer for software and hardware distributor Tech Data, only for it to be topped by private equity firm Apollo Global Management.
Tech Data announced late Wednesday that the company had agreed to terms of an acquisition by Apollo that values the company at about $6 billion, or $145 a share. Apollo had previously bid $130 a share for the company.
Apollo said in a press release Wednesday that Tech Data had received a “superior proposal” from an unnamed rival bidder on Nov. 23. That prompted Apollo to raise its offer.
CNBC reported Friday that the mysterious suitor was Berkshire Hathaway and that the Buffett-controlled company made a $140 a share bid for Tech Data. Tech Data had no comment about the speculation. Berkshire Hathaway and Apollo were not immediately available for comment.
Still, it should not be a huge surprise that Buffett may be looking to go shopping.
Berkshire Hathaway said earlier this month that the company now has $128 billion in cash. And Buffett wrote in the company’s annual shareholder letter in February that he hopes to make “an elephant-sized acquisition.”
There has been intermittent chatter this year that Berkshire may be interested in struggling California utility PG&E, and there are rumors that Buffett may want to buy a major airline, such as Southwest. Berkshire already owns shares in Southwest, as well as Delta, American and United.
Buffett has lamented the fact that valuations for many companies are prohibitively expensive given that the stock market is near all-time highs. And he has continuously stressed that he won’t overpay for deals.
Problems at struggling food giant Kraft Heinz, a major Berkshire holding, might be keeping Buffett from overspending on acquisitions. Berkshire teamed up with private equity firm 3G Capital in 2013 to buy Heinz and followed that up with the Kraft merger in 2015.
That investment has been a major flop, as Kraft Heinz has posted weak sales for many of its core brands in recent years and written down the value of several of them. Kraft Heinz has also aggressively cut costs at a time when many of its rivals are spending to buy trendier organic food companies.
Berkshire’s last major acquisition was the $37 billion deal for aerospace components maker Precision Castparts in 2016.
Buffett recently put $10 billion of Berkshire’s cash to work with an investment in oil company Occidental to help it outbid Chevron and acquire competitor Anadarko Petroleum.
Rival billionaire Carl Icahn, an investor in Occidental, criticized that deal, telling CNN Business earlier this year that he considered the Anadarko deal “a travesty” because of the sweet terms Occidental gave Buffett in order to secure the Berkshire financing.