Bargain Hunting Has No Borders, Buffett Says

L.A. Times Archives

May 8, 2006 12 AM PT

From the Associated Press

OMAHA — Billionaire Warren Buffett said Sunday that his investment company, Berkshire Hathaway Inc., is willing to buy companies anywhere in the world if the circumstances are right.

Berkshire announced its first purchase of a company based outside the United States on Friday, and Buffett and Vice Chairman Charles Munger said the acquisition of Israel-based Iscar Metalworking Cos. probably won’t be the last foreign purchase for the Omaha-based company.

“There are dozens of countries in which we would be happy to buy the right business,” Buffett said.

During Sunday’s news conference Buffett and Munger especially praised South Korean and Japanese businesses. A day earlier, Buffett and Munger spent more than five hours answering questions at the company’s annual shareholder meeting.

“Our problem outside the United States is we aren’t all that well-known,” said Munger, 82.

Both men said they hope Berkshire’s deal to pay $4 billion for 80% of Iscar, which makes metal-cutting tools, will raise the company’s profile overseas. Berkshire owns all or part of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurant and utility firms. And it has large stakes in such companies as H&R; Block Inc., Anheuser-Busch Cos. and Coca-Cola Co.

Buffett and Munger said they have a financial incentive to shop overseas.

“We don’t find screaming bargains in the United States anywhere,” Buffett said.

Berkshire does own securities in Europe, but Buffett said the company won’t disclose them until it has to.

Buffett said Berkshire’s criteria for foreign investments doesn’t differ from the list that has been published in the company’s annual report for years. Berkshire is interested in simple-to-understand businesses with at least $75 million in earnings, a proven track record and stable management.

But Munger said there are additional considerations. “We don’t like kleptocracies.”

A kleptocracy is a country where theft is common in government and business, he said. “We need a rule of law,” Munger said.

The 75-year-old Buffett again faced questions about who will follow him as Berkshire’s chairman and chief executive. Previously, Buffett has said that his son, Howard, should be the next chairman and that the board has agreed on the next CEO.

Buffett again refused to identify the person the board chose from three Berkshire managers to be the next leader.

The four Berkshire managers who keep coming up in the speculation are Ajit Jain, who runs Berkshire’s reinsurance division; Geico Chief Executive Tony Nicely; Richard T. Santulli of NetJets; and David Sokol, CEO of Iowa-based utility MidAmerican Energy.

Buffett said Howard Buffett should be Berkshire’s next chairman to protect the company’s culture but it will be up to the board to elect the next chairman because he’ll be dead when that happens.

“I won’t be there,” Buffett said. “On that day, there will be 10 directors instead of 11.”