(Adds investor comments on acquisition targets; bylines)
By Jonathan Stempel and Jennifer Ablan
May 3 Warren Buffett on Saturday said Berkshire
Hathaway Inc would team up again with 3G
Capital on more transactions, perhaps very large ones, despite
criticism of the Brazilian investment firm's decision to cut
thousands of jobs at HJ Heinz & Co.
"I think 3G does a magnificent job of running businesses,"
Buffett said at Berkshire's annual meeting. "We're very likely
to partner with them, perhaps on some things that are very
Berkshire had nearly $49 billion of cash as of March 31 and
doesn't pay a dividend, leaving Buffett and his deputies to look
for capital-spending opportunities and takeovers.
Smead Capital CEO Bill Smead told Reuters Insider that
Berkshire may be eyeing "a huge acquisition" potentially worth
around $58 billion, after Buffett's comments regarding 3G
"He's built up a huge pile of cash - I think $28 billion in
excess of what they need," Smead said. "And Charlie (vice
chairman Charles Munger) said, 'Well, we can borrow $30 billion
on top of that', that's $58 billion. That would be a huge
acquisition. Now, that might cause a few people that have
companies that size to call them. Remember, they don't do
hostile deals. So he opened up some realms today that were new
in that respect."
Mario Gabelli, chairman and chief executive officer of Gamco
Investors Inc, said Buffett should consider acquiring General
"In (Buffett's) annual report, he gives you a couple of
dots. One of the dots was very fundamental. He said 'Look, I
learned that the model that I used on Heinz could be
duplicated'," Gabelli said.
"What is out there that is a $20 billion-$30 billion
acquisition that you can have someone else manage? Why not
something like General Mills? Which is cereal, which has been
around for about 100 years, where there is pricing power, where
there is population is going the right way - and he can put a
lot of money to work."
Berkshire contributed $12 billion toward the more than $23
billion purchase of Heinz, but gave 3G day-to-day control of
operations. Some critics have said 3G's job cuts do not reflect
Berkshire's typical values toward people who work at companies
"We have not enforced, or attempted to enforce, nor do we
wish to enforce, a strong discipline in every subsidiary as to
whether they have a few too many people or not," Buffett said.
"A great many don't."
Munger, 90, said Berkshire has never "loved over-staffing."
Buffett responded that the approach to minimizing personnel
applies more to Berkshire's main office in Omaha - Buffett said
just 24 people work with him there - than to the company's
businesses, which at year end employed more than 330,000 people.
Most subsidiaries are "managed on a lean basis, but that's
not true of everyone we've been involved with over the years,"
(Reporting By Jennifer Ablan; Editing by Bernard Orr and Gunna