NEW YORK (Reuters) - Berkshire Hathaway Inc Chairman and Chief Executive Officer Warren Buffett said on Monday that tax-driven mergers could attract the attention of Congress and would cause a “fight” in corporate America.
Buffett, in reference to U.S. drugmaker Pfizer Inc.’s aim to lower its tax rate by changing its domicile to Britain as part of its pursuit of Britain’s AstraZeneca Plc, said that more companies were seeking mergers for tax-driven reasons.
“It will gather momentum and my guess is that when you get to companies of this size, this prominence, and with this speed up of momentum, my guess is that Congress one way or another addresses this,” Buffett told cable television network CNBC.
“This whole thing on the foreign situation I think will cause one hell of a fight in corporate America,” he said.
Buffett said that while there could be a new resolution to corporate taxes beyond the topic of foreign tax rates, U.S. companies were flourishing under the current tax code.
“American business, I will tell you, whether it’s Berkshire Hathaway or Pfizer or Apple, are doing wonderfully under this tax code.”
Buffett also said that moves in U.S. government bond interest rates did not affect how Berkshire operated. The yield on the 10-year U.S. Treasury note fell to 2.572 percent on Monday, its lowest level in over three months.
“If it moved up 50 basis points or down 50 basis points, we would not do anything differently. We don’t react to macro factors at Berkshire,” he said. He said the 10-year yield would likely be higher than 3 percent by the end of the year.
Buffett also reiterated that he had no desire to “go to war” with Coca-Cola Co, and that his approach to the company’s controversial equity compensation plan was more effective than the style that might be used by activist investor Carl Icahn.
Buffett, responding to criticism from Icahn regarding Buffett’s decision to abstain from the shareholder vote, said, “I think our style actually would be more effective than the style that might be proposed by Carl.”
Buffett told CNBC he had not spoken to Coca-Cola CEO Muhtar Kent since the company’s annual meeting on April 23.
Berkshire Vice Chairman Charlie Munger said later in the interview that he agreed with Buffett’s decision to abstain from the vote, and that it was not a “difficult decision.”
“It took about 10 seconds,” Munger said. “I thought he handled it perfectly.”
Munger also said that he was against exporting natural gas given how “precious” it is. “I‘m totally against exporting natural gas. I don’t like oil to be exported either,” he said.
Buffett also praised Berkshire Hathaway portfolio managers Todd Combs and Ted Weschler, and said that while they were not candidates to succeed him as chief executive, their duties in investing would aid the next chief executive.
“They will not be the chief executive officer, but they will be there to help the chief executive officer in that arena,” he said.
Reporting by Sam Forgione; Editing by Jeffrey Benkoe and Nick Zieminski