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Financials

FACTBOX-Berkshire's Buffett on succession, acquisitions

 April 28 (Reuters) - Berkshire Hathaway Inc BRKa.N
BRKb.N, the insurance and investment company run by Warren
Buffett, has been preparing succession plans for when the
79-year-old billionaire steps down. It also hunts for
acquisitions, preferably large.
 The company is holding its annual meeting on Saturday in
Omaha, Nebraska. For a preview of the annual meeting, please
click [ID:nN28167303].
 Buffett has repeatedly said Berkshire has three internal
candidates to potentially replace him as chief executive, and
that the company's board of directors knows who it would
install on a moment's notice.
 He has never publicly named the candidates. There is
growing speculation that David Sokol is the leading candidate.
Sokol is chairman of Berkshire's MidAmerican Energy Holdings Co
unit, and Buffett installed him as chief executive of NetJets
Inc to clean up the private jet unit's balance sheet.
 In February, Berkshire paid $26.5 billion for the 77.4
percent of railroad operator Burlington Northern Santa Fe Corp
it did not already own. Berkshire had no major acquisitions in
2009. It spent $6.1 billion on acquisitions in 2008.
 Berkshire ended 2009 with $30.56 billion in cash. The
Burlington takeover reduced that sum to closer to $20 billion.
Buffett has said he wants to keep $10 billion on hand.
 The following information about Buffett's succession plans
and Berkshire's acquisition strategy is drawn from the
company's 2007 and 2009 annual reports:
BUFFETT ON POTENTIAL SUCCESSORS (FROM 2007 REPORT)
 "We have for some time been well prepared for CEO
succession because we have three outstanding internal
candidates. The board knows exactly whom it would pick if I
were to become unavailable, either because of death or
diminishing abilities. And that would still leave the board
with two backups.
 "We have indeed now identified four candidates who could
succeed me in managing investments. All manage substantial sums
currently, and all have indicated a strong interest in coming
to Berkshire if called. The board knows the strengths of the
four and would expect to hire one or more if the need arises.
The candidates are young to middle-aged, well-to-do to rich,
and all wish to work for Berkshire for reasons that go beyond
compensation."
ACQUISITION CRITERIA (FROM 2009 REPORT)
 "We are eager to hear from principals or their
representatives about businesses that meet all of the following
criteria:
     (1) Large purchases (at least $75 million of pretax
earnings unless the business will fit into one of our existing
units),
     (2) Demonstrated consistent earning power (future
projections are of no interest to us, nor are 'turnaround'
situations),
     (3) Businesses earning good returns on equity while
employing little or no debt,
     (4) Management in place (we can't supply it),
     (5) Simple businesses (if there's lots of technology,
we won't understand it),
     (6) An offering price (we don't want to waste our time
or that of the seller by talking, even preliminarily, about a
transaction when price is unknown).
 "The larger the company, the greater will be our interest:
We would like to make an acquisition in the $5-20 billion range
... We will not engage in unfriendly takeovers... We prefer to
buy for cash, but will consider issuing stock when we receive
as much in intrinsic business value as we give."
  (Reporting by Jonathan Stempel; editing by Andre Grenon)


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