April 28 (Reuters) - Berkshire Hathaway Inc, 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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