Buffett, With Heinz Deal, Achieves 19th-Century Image of Robber Baron
In 2008, Berkshire provided key financing to Mars in its acquisition of Wrigley, a Chicago-based soap and baking products company known for its popular chewing gum that traces its history to 1891.
A November 2011 deal for newspaper conglomerate Omaha World-Herald indicates Buffett could have used ink, pulp and opinionated broadsheets to publish fiery screeds against the robber barons of a past day and age.
The $300 million deal for the Omaha World-Herald put a newspaper conglomerate that traces its heritage to the mid-1880s and a highly political editor, William Jennings Bryan, who opposed gold and the titans of early U.S. industry, within Berkshire's coffers.
Other recent Berkshire acquisitions would have never happened had target companies not survived the Great Depression or seen a business opportunity in its wake.Berkshire's $9 billion deal for Lubrizol put a company in Buffett's growing portfolio of industrial businesses that was created just prior to the Wall Street crash of 1929. Lubrizol, founded in 1928, was incorporated to sell a graphite lubricant called Lubri-Graph. The company later expanded to a chemicals and materials behemoth that is a key supplier to the transportation and industrial sectors. Berkshire bought insurer Geico (Government Employees Insurance Co.) for $2.3 billion in 1995, taking control of a business that was created in the throes of the Great Depression to provide insurance to federal employees and enlisted military officers. In November, Berkshire paid $500 million for The Oriental Trading Co., a direct marketer of novelty products and toys founded in 1932. The company, formerly owned by private equity giant The Carlyle Group (CG), was one of the earliest wholesale companies in the U.S. Some deals even aim for the assets of titans of industry from a previous age, which blazed the trail for Berkshire's current diversified structure. In 2007, Berkshire bought a controlling stake in Marmon Group, a conglomerate spanning 125 businesses founded by Jay and Robert Pritzker, for $4.5 billion. Even when targeting stock investments, Berkshire and Buffett largely avoid younger startups. Consider that Berkshire's largest technological holding is IBM (IBM), a present-day tech heavyweight that traces its history to 1911 and mechanical business machines. All told, Berkshire's $28 billion acquisition for H.J. Heinz may say as much about Buffett's long-term investing philosophy as it does about the Oracle's growing presence in the pantheon of American industry. While Buffett is unequivocally one of the titans of present-day U.S. business and finance, deals such as Berkshire's acquisition of Heinz indicate Buffett may be of a timeless breed. For more on Thursday's deal for Heinz, see how Berkshire used its 'elephant gun' for M&A. Also see why Wells Fargo, Berkshire's top bank stock holding, may be benefitting from its relationship with Warren Buffett. -- Written by Antoine Gara in New York Follow @AntoineGara
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV