Berkshire Hathaway Inc is an investment group which owns a wide range of businesses engaged in numerous different activities. Its subsidiaries include Geico Insurance and Fruit of the Loom as well as MidAmerican Energy, NetJets aircraft rentals, International Dairy Queen restaurants and Benjamin Moore paints. The group serves as the main financial vehicle of the legendary "Sage of Omaha" Warren Buffett, the world's wealthiest investor. Traditionally, the most important of these holdings has always been the property and casualty insurance business. However, more recently, Buffett has pushed into other areas, making his biggest investment to-date in 2009 with the purchase of railway company Burlington Santa Fe. Other substantial deals have come thick and fast. In 2013, Berkshire supplied most of the ready cash for an even bigger deal, the private buyout of food giant Heinz by private equity firm 3G Capital. Towards the end of 2014, Buffett agreed to acquire the free-standing Duracell battery business from P&G for around $2.9bn net. A few months later, Heinz announced plans for a reverse takeover of Kraft Foods.
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Adbrands Weekly Update 1st Mar 2018: America's gun laws have been in a bright and unwavering spotlight since the Parkland school shooting two weeks ago, and corporate responses to that horror finally began to filter through this week. More than 20 leading US brands have severed promotional ties and discount partnerships with the National Rifle Association in response to a social media campaign to which several survivors of the incident have given their support. They include Delta and United airlines, MetLife, Symantec, Best Western hotels and car rental operators Hertz, Avis and Enterprise. The NRA reacted to the outcry with (possibly ill-advised) outrage and defiance, accusing these brands of a "shameful display of political and civic cowardice" as well as a lack of patriotism. FedEx was one of the few companies to reject calls for a boycott. The NRA, it said, is one of hundreds of organisations with whom it has a discount partnership. "FedEx has never set or changed rates for any of our millions of customers around the world in response to their politics, beliefs or positions on issues." A few days later, however, FedEx's resolve seemed to have wavered a little, when it issued a new statement "clarifying" its position. It does not offer a discount to the NRA itself, but only to companies and individuals who are members. However, arch-rival UPS, it pointed out, does have a direct partnership with the NRA.
The furore puts companies in a difficult position. Even Warren Buffett, legendary investor and CEO of Berkshire Hathaway, but also a Democrat politically, weighed in on the issue. "I think it's a mistake to start getting personal views and trying to impose them on an organization," he told CNBC. "What the [boycott organisers] are doing is very admirable, but I don't think Berkshire should say we're not going to do business with people who own guns. I think that would be ridiculous." Perhaps the first truly constructive step forward came from retail chain Dick's Sporting Goods, which said it will no longer sell assault rifles or high capacity magazines at its Field & Stream specialist hunting goods subsidiary. Mainline Dick's stores had already stopped selling assault weapons in 2012 after Sandy Hook. Dick's also raised the age limit for purchase of any firearms in its stores from 18 to 21 years of age. Shortly afterwards, Walmart and Kroger's Fred Meyer chain followed suit in barring sales to under-21s. Both had already previously stopped selling assault weapons.
Adbrands Weekly Update 13th Oct 2016: Mars has taken full control of the Wrigley chewing gum business, buying out investment partner Berkshire Hathaway for an undisclosed sum. Mars teamed up in 2008 with billionaire Warren Buffett's investment vehicle to acquire Wrigley. Acting as financier to the deal, Berkshire contributed a total of $6.5bn to the purchase price. Around two-thirds of that sum was a loan to Mars, which has already been repaid. The remaining $2.1bn purchased a direct 20% stake in what then became a separate operating division combining Mars's sugar confectionery brands with Wrigley's gum brands. It has remained a separate legal entity from the main Mars business for the past eight years. Berkshire's preference shares in the business carried a guaranteed 5% annual return, which has netted that group around $840m to-date in dividends. The buyout allows Mars to consolidate Mars Wrigley with its main chocolate confectionery division.
Adbrands Weekly Update 20th Nov 2014: Procter & Gamble found a buyer for its Duracell battery business in the form of billionaire investor Warren Buffett. He has agreed to take over the standalone business from P&G for a net value of around $2.9bn. The deal is to be structured as a slightly unconventional but highly tax-efficient asset swap. Buffett's Berkshire Hathaway holding company already holds a shareholding in P&G, which it inherited when the packaged goods giant engulfed Gillette - a longtime Buffett favourite - for stock. It will surrender these shares, worth $4.7bn at current prices, back to P&G, which will in return inject $1.8bn in cash into the Duracell Company as a parting dowry. As a result, both companies avoid a sizeable tax penalty that would have been generated by a straight sale of assets. However some investors flagged up the deal as a vote of no confidence by Buffett in P&G itself, in that he would rather own a small maker of alkaline batteries than have shares in the world's biggest, but slightly challenged, packaged goods giant.
Adbrands Weekly Update 16th Oct 2014: For the first time in its history, Warren Buffett's Berkshire Hathaway investment group has begun to establish that name as a brand in its own right. It has already started to rebrand its residential real estate division HomeServices under the Berkshire Hathaway name, and plans to expand that estate to more than 1,400 owned and franchised outlets by next year. A similar strategy has now been extended to car dealership Van Tuyl, acquired by the group this month. It is America's 5th largest auto dealer with sales in excess of $8bn. The group's utilities businesses are also being housed under the Berkshire Hathaway brand.
Adbrands Weekly Update 6th Mar 2014: Warren Buffett slipped from the top couple of places in Forbes' annual rich list - he ranked 4th in the latest survey, behind Bill Gates, telecoms tycoon Carlos Slim and Inditex founder Amancio Ortega. However his investment vehicle Berkshire Hathaway reported its best performance for several years in 2013. The economic resurgence in the US powered a 32% jump in profits to $19.5bn, on combined revenues of $182.5bn. Most of the businesses in Berkshire's extensive portfolio had a good or great year, but one of the best performers was its insurance subsidiary Geico. In his letter to shareholders, Buffet revealed that Geico has now overtaken Allstate to become the #2 US auto insurer by earned premiums behind State Farm. Geico's total rose 11% to $18.57bn, compared to Allstate's $18.45bn. The crucial difference though is the fact that the vast majority of Geico's business is generated online rather than through the armies of agents employed by its two main rivals. Pretax earnings almost doubled in 2013 to $1.1bn. Buffett also voiced his ongoing commitment to Heinz, which the group acquired last year in a partnership with Brazilian investors 3G Capital. "Though the Heinz acquisition has some similarities to a 'private equity' transaction, there is a crucial difference," said Buffett. "Berkshire never intends to sell a share of the company. What we would like, rather, is to buy more, and that could happen. Certain 3G investors may sell some or all of their shares in the future, and we might increase our ownership at such times." The weakest part of Berkshire's extensive portfolio appears to be its local newspaper division, Buffett has been steadily acquiring small-town regional newspapers in the US, gambling that the precipitate decline in their circulation is coming to an end. That doesn't appear to be the case, not yet at least, and 26 of the 28 papers he's owned for at least a year reported further declines, according to analysis by Bloomberg.
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