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Buffett's Berkshire offers to buy rest of Wesco Financial for about $515 million

Warren Buffett's Berkshire Hathaway plans to buy the remaining shares of Wesco Financial Corp. that it doesn't already own, according to an SEC filing this afternoon.

Berkshire currently owns 80.1 percent of Wesco. It has proposed to buy the remaining 19.9 percent at book value.

Wesco has about 1.43 million shares outstanding that Berkshire doesn't own. Wesco's stock was up about 11 percent today on the news and was trading at about $361 a share near the end of the day.

Assuming investors have correctly estimated that Wesco's book value is about $361 a share, Berkshire would end up paying roughly $515 million for the remaining shares--a relative drop in the bucket for Buffett's firm.

The transaction would be paid for in cash and Berkshire B stock. That's the second time this year Berkshire has taken advantage of its lower-price B shares as part of a merger deal (the other being the much-larger Burlington Northern Santa Fe Corp. deal).

The deal must be approved by Wesco and Berkshire's boards, but it would be highly surprising if it weren't given the green-light. Buffett's longtime friend and business partner Charlie Munger is chairman of Wesco's board, and their close friend Bill Gates owns about 1.3 percent of Wesco's outstanding shares.

Finally, here's a prediction -- Berkshire will someday do the same thing with the 10.5 percent of MidAmerican Energy Holdings that it does not presently own.

Comments

  • Leroy Michael Eide 4 years ago

    Looks like WB, CM and BG want to STEAL the company. I will lose on this DEAL and they are flat crooked.

  • Leroy Michael Eide 4 years ago

    Without reservation, this company is worth atleast $500 per share. This is absolutely unbelievable that SEC will allow this to happen. Please write to me how I can stop this SHAM from happening. I own shares and want to do anything to Make their life miserable. Is is this CLEAR enough communication?

  • 21 years old investor 4 years ago

    @ Leroy Michael
    I myself do not know the details of wesco's balance sheet but buffett offer a price equivalent to the book value thus liabilities are mattering in the price.

  • Leroy Michael Eide 4 years ago

    The cash on the books is near the price that WB has offered and all the companies are absolutely FREE. This is wrong and it will never hunt in my book. You need to learn how to read a balance sheet - you need to wake up and smell the coffee as we say in Texas. The company is worth $500 per share (fair market value based on the median price during the last 3 years). Therefore, following the guru master scenario of 20% back of TRUE MARKET VALUE - Warren should pay $400 or more. This is an absolute STEAL and WB knows he is not eating his own cooking. All of his humor and sayings cloak the true methodology that is truly his - those with the gold RULE. I hope he pays a big price and there is such a thing as KARMA and any Indian will tell you what that means.

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