Tag Archives: Berkshire Hathaway

Lubrizol Gets Tax Abatement Extension to Expand Wickliffe Headquarters

(BRK.A), (BRK.B)

The Wickliffe, Ohio City Council has approved the extension of the 10-year, 50 percent tax abatement enterprise zone that was originally granted to Berkshire Hathaway’s Lubrizol Corporation in 2014. The extension means the tax abatement will now be available to Lubrizol until 2029.

The Council had given the mayor permission to extend the agreement at its December 16, 2016 meeting.

Lubrizol is planning to commence construction in 2018 on a 63,000-square-foot, single-story multi-purpose facility at its current Lakeland Boulevard headquarters. The extension will serve to connect two of its existing buildings.

Acquired by Berkshire Hathaway for $9 billion in cash in 2011, specialty-chemicals-maker Lubrizol owns and operates manufacturing facilities in 17 countries.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

2014 Berkshire Hathaway Acquisitions You Didn’t Hear About

(BRK.A), (BRK.B)

2014 was a busy year for Berkshire Hathaway, with over $5 billion in acquisitions both directly by Berkshire Hathaway and through its companies. I’m sure you heard about the purchase of Procter & Gamble’s Duracell battery division, but did you know that other acquisitions made Berkshire the leader in beverage dispensing, and got Berkshire into automobile retailing for the first time? Here is a list of some of the other lesser-known acquisitions. Did you miss any of them?

Marmon Retail & End User Technologies Acquires Cornelius, Inc.
Date: January 2014
What it is: Cornelius, Inc. is the world’s leading supplier of beverage dispensing and cooling equipment. They manufacture and market a broad line of beverage dispense solutions for soft drink, beer, ice, juice, tea, and frozen as well as a complete line of accessories.

Berkshire Hathaway Specialty Insurance Acquires MyAssist, Inc. from Noel Group
Date: January 2014
What it is: MyAssist is a technology-driven, cloud-based personal assistance solution that leverages advanced technologies to give customers a customized, personal experience. MyAssist provides Mercedes-Benz and Ford with live-agent personal-assistance and telematics service using “location-aware technology” from Verizon Communications Inc.

MiTek Acquires Ellis & Watts Global Industries
Date: April 2014
What it is: Ellis & Watts is the recognized leader in the engineering, design, and fabrication of highly customized HVAC and other products sold into the nuclear, military, and other industrial end markets.

EXSIF Worldwide, Inc. Buy’s OCS
Date: April 2014
What it is: OCS Limited is a tank rental and chemical supply company based in Aberdeen, United Kingdom. OCS operates in the offshore oil and gas sector, serving clients in the North Sea.

Berkshire Hathaway Acquires Van Tuyl Group
Date: April 2014
What it is: Van Tuyl Group is the nation’s largest privately-owned auto dealership group, which ranks fifth among all U.S. auto dealership groups.

Berkshire Hathaway Energy Acquires AltaLink
Date: May 2014
What it is: AltaLink owns 12,000 kilometers of transmission lines and 280 substations that bring electricity to 3 million customers in Alberta, Canada.

Berkadia Acquires Keystone Commercial Capital
Date: May 2014
What it is: Keystone Capital is a full-service commercial mortgage banking company headquartered in Phoenix that services more than $2 billion in commercial real estate loans.

BH Media Acquires Catamaran Group
Date: September 2014
What it is: Catamaran Group publishes 12 weekly papers, with circulations ranging from 7,000 up to 15,000, serving the southern New Jersey shore area. While the individual circulations are small, the combined circulations exceed 111,000.

Lubrizol Acquires Warwick Chemicals
Date: November 2014
What it is: Warwick Chemicals is a leading global developer, producer and supplier of stain removal technology with hygiene benefits. Headquartered in Mostyn, North Wales, Warwick Chemicals has strong positions with global and regional detergent producers. Their products are an essential element in laundry detergent powders and automatic dishwashing products used across five continents and in more than 50 countries.

Lubrizol Acquires Engineered Chemistry and Integrity Industries
Date: December 2014
What it is: Engineered Chemistry supplies additives and fluids for a range of oilfield activities, including cementing, drilling, flow assurance and fracturing. It offers chemistry expertise to solve problems throughout the oil and gas drilling process. The business consists of a core manufacturing and research organization which supports a global field distribution network. Engineered Chemistry was built through a series of acquisitions over the past 12 years and is headquartered in Houston, TX. It operates 10 sites located predominantly in North America. Integrity Industries manufactures drilling fluid systems, including diesel, mineral oil and synthetic oil based fluids. The company supplies these drilling fluid systems to retail drilling fluid companies along with technical support.

Berkshire Hathaway Acquires Charter Brokerage
Date: December 2014
What it is: Charter Brokerage is a leading global trade services company providing complete customs, import, export, drawback and related services.

There you have it!

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkadia Adds $2 billion to its Loan-Servicing Portfolio with Acquisition of Keystone Commercial Capital

(BRK.A), (BRK.B)

Berkshire Hathway’s joint venture Berkadia Commercial Mortgage has purchased Keystone Commercial Capital.

The acquisition of the Phoenix, Arizona company will add $2 billion to Berkadia’s loan-servicing portfolio, which currently stands at $229 billion.

Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.

Berkadia was founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation.

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Berkshire Hathaway’s BH Media Finds Multiples Success

(BRK.A), (BRK.B)

Before the dawn of the Internet, newspapers were media cash-cows that produced strong, reliable revenue streams from display advertising and classified advertising. They became hot items, and throughout the 1990s they sold at high multiples. For example, the 1993 sale of the Boston Globe to the New York Times Company went for $1.1 billion.

In more recent years, newspapers have been known for declining readerships, and being burdened with high levels of debt.

When the cash-strapped New York Times decided to unload the Boston Globe, it sold for only $70 million–a 93% loss.

Going in the Exit

While everyone has been declaring the death of the American newspaper and running for the exits, one company, Berkshire Hathaway, has been running in the door.

Berkshire’s BH Media Group has assembled a growing empire of 69 newspapers and other publications located in the states of Virginia, North Carolina, South Carolina, Alabama, Florida, Texas, Iowa, Nebraska, Oklahoma and New Jersey.

Warren Buffett has long been a fan of newspapers, all the way back to his 1977 purchase of the Evening News, which serves Buffalo, New York. And, Berkshire had long owned a major share of the Washington Post.

But that was then. Are they still good business today?

EBITDA Comes Down to Earth

The magic word in the newspaper acquisition business is “multiple.” The multiple under consideration is the multiple of annual earnings before interest, taxes, depreciation, and amortization (EBITDA).

In BH Media Group’s case, the great news is that it’s paying reasonable multiples that are within the 4-5 EBITDA range.

Just under a decade ago in 2005, Lee Enterprises bought Pulitzer Inc. for 13 times EBITDA in a deal worth $1.46 billion. In contrast, Berkshire Hathaway spent a mere $143 million in acquiring 60 newspapers from Media General. And, unlike the newspaper empires of the 1990s, BH Media Group’s papers have no debt.

BH Media Group’s Evolving Strategy

BH Media Group originally set its sights on small markets, believing they presented the opportunity for a still healthy business model presenting local interest news that is hard to get from other sources. However, it has seen that larger markets have held up well in both circulation and advertising revenue.

For example, The Richmond Times-Dispatch in Richmond, Virginia, has a daily circulation of 102,258 and serves a population in the Metropolitan Statistical Area (MSA) of 1,231,980. Similarly, the Tulsa World in Tulsa, Oklahoma, has a daily circulation of 88,601 and serves an MSA population of 951,880. Papers in even smaller markets like Winston-Salem, North Carolina, and Roanoke, Virginia still reach sizable populations. The Roanoke Times, for example, has a daily circulation of 64,631, and serves an MSA population of over 312,000.

While print circulation may be fading, digital platforms are playing an ever larger role. For example, the Winston-Salem Journal, which has a daily circulation of 50,090 and serves an MSA population of 647,697, has 3 million page views per month.

Capturing Digital Revenues

Digital revenues come from a combination of online subscribers and online advertising. All the BH Media Group publications use a limited free access paywall system. Readers have proven willing to pay to get unlimited access to in-depth information about their local market. Some articles are available for free, but the number of free articles available per month varies by market depending on competition. BH Media Group is able to reduce the number of free articles in markets where the publications have no competitors.

Sharing Reporting Resources

BH Media Group doesn’t have a national news gathering operation, preferring to use the Associated Press. It knows that today’s reader is gathering national and international news from myriad outlets. Instead, it focuses on in its strength–local and regional reporting–where its reporters can gather far more stories than the local TV or radio stations.

In a market such as Winston-Salem, the Winston-Salem Journal has a newsgathering staff of 50, as compared to the 9 reporters at a local TV station. It’s in regional reporting that BH Media Group finds additional synergies. For example, its 30 print media properties in Virginia all have access to articles created by the collective BH Media Group publications, and can share reportage on state government and other state-wide issues.

Eliminating Crushing Debt Pressure

Over the past decade, newspapers have spent much of their time on debt relief, much of it through cost cutting through staffing cuts that have diminished their newsgathering ability. With Berkshire Hathaway’s deep pockets, BH Media Group’s papers all operate debt free, freeing them up to concentrate on being the most effective media outlets in their markets.

Growth Strategies

As for the future, BH Media Group continues to look aggressively for additional print media properties. It shuns the major markets, with Buffett having shown no interest in bidding for the Washington Post, which went to Amazon’s Jeff Bezos for $250 million in the fall of 2013. Instead, BH Media Group prefers to pick off the smaller markets that collectively having millions of readers and millions in revenues.

Warren Buffett is known for his patience. He is also known for growing his positions over time, and it wouldn’t be surprising if in another decade BH Media Group is the king of regional print media all over the U.S.

All purchased at reasonable multiples.

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

AT&T Acquisition of DirecTV Means Windfall for Berkshire Hathaway

(BRK.A), (BRK.B)

Whether AT&T’s newly announced $48.5 billion acquisition of DirecTV is ultimately good for both parties is uncertain, but one thing that is certain, is that it means a huge windfall for Berkshire Hathaway.

Berkshire reported owning 34.5 million shares of DirecTV as of March 31, 2014, and those shares were purchased at roughly half the tender price of $95 per share being offered by AT&T.

A Windfall for Berkshire

At the $95 share price, Berkshire’s holdings will be worth at least $3.27 billion, provided that it did not accumulate any additional shares after March 31.

A Winner for Todd Combs and Ted Weschler

Berkshire’s DirecTV stake was purchased by Todd Combs and Ted Weschler, as a part of portfolios they manage on behalf of the company.

Combs and Weschler each manage $7 billion portfolios, and have seen the amount of money under their supervision increased significantly in the past two years as Warren Buffett has grown more confident in their approaches.

Both stock pickers beat the S&P 500 in 2013. 2014 looks to be a very good year as well.

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway Makes Aggressive Move into Canadian Energy Market

(BRK.A), (BRK.B)

With the recently announced acquisition of AltaLink, Berkshire Hathaway’s newly christened Berkshire Hathaway Energy has made an aggressive move into the Canadian energy market.

New Canadian Beachhead Strategy

Under the moniker MidAmerican Energy, the company’s previous Canadian energy plays consisted of joint ventures where the other partners took the lead. Now, as Berkshire Hathaway Energy, the company is going out on its own to become a leader in the growing markets of Calgary and Edmonton, Alberta. It’s a move that will have BHE serving 85% of the population.

In acquiring AltaLink from SNC-Lavalin Group Inc. (TSX:SNC), BHE will take possession of 12,000 kilometers of transmission lines and 280 substations that bring electricity to 3 million Albertans. The total cost of the acquisition is C$3.2 billion, approximately US$2.9 billion.

Warren Buffett has long been known for a buy-and-hold acquisition strategy that places an emphasis on finding companies with top-flight management that is kept in place. Similarly, Berkshire Hathaway Energy, under the direction of chairman, president, and CEO Greg Abel, has the same philosophy. AltaLink’s management will remain headquartered in Calgary, and it will continue to operate as a local, independent company.

Employing the Berkshire Strategy

Also in keeping with another of Buffett’s strategies, Abel’s goal is to buy assets that will be owned forever.

It’s a sizeable acquisition as AltaLink had assets of C$5.9 billion as of December 31, 2013, and generated revenues of C$534.1 million in 2013.

Is this just another acquisition in BHE’s portfolio, or does it represent additional focus on the Canadian energy market?

Apparently, both.

On one hand, it’s a natural move for BHE’s combination of regulated utilities and infrastructure companies that span the U.S. and reach as far as the U.K. and the Philippines. But there’s reason to expect more. Greg Abel hails from Edmonton,  he knows Alberta’s power demands are only going to grow, and he sees AltaLink as a beachhead acquisition.

Alberta’s Growing Power Needs

Industry leaders are already calling for more than 9,400 MW of new thermal power and more than 3,000 MW of new renewable power to fuel future development in Alberta.

Under Abel’s direction, BHE has been growing dramatically, including last year’s purchase of NV Energy that brought 1.3 million customers in Nevada under its wing. In total, BHE has amassed a $70 billion portfolio of energy companies that produced $12.6 billion in revenues in 2013.

A Future Berkshire Leader?

At the youthful age of 51, Greg Abel is often mentioned on the short-list of Buffett successors. He also sits on the board of directors of H.J. Heinz Company board of directors–Berkshire Hathaway’s biggest acquisition since BNSF Railway was acquired in 2010. It’s no surprise his name is on people’s lips, considering BHE’s high-powered growth strategy that has no end in sight. And the Canadian energy market may just be where that strategy leads.

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.