NEW YORK (Reuters) – Warren Buffett’s chase for a large acquisition could have the ~ of to targets like Eaton, Illinois Tool Works or Cliffs Natural Resources, aggregate of which seem to fit his latter preference for growth in industries exterior of his core insurance unit.
Using Thomson Reuters StarMine given conditions, Reuters Insider compiled a list of greater degree of than 80 companies that met Buffett’s basic criteria — to wit industry leaders with strong balance sheets that are available on the cheap.
Names like ITW, Cliffs and Eaton lineament on the list, along with bragging-profile international names like Rolls-Royce Group and AkzoNobel.
All of them are trading at enough of a discount to analysts’ expected profits. growth for the next five years that Buffett could pay a 20 percent reward and still be getting value in the deal.
“He eternally wants a simple defensible durable business that will still be here and calm be on top of its courageous in 25 years,” said James Armstrong, president of Henry H. Armstrong Associates, which manages about 0 million, around a mercy of which is invested in Berkshire.
The Reuters Insider separation focused on companies with market capitalizations in the billion to billion order that meet Buffett’s publicly established criteria for deals, including a annals of profitability and little debt.
MORE CAPACITY TO DEAL
Buffett made a dash earlier this month in buying lubricant constructor Lubrizol Corp for billion, extending the tendency of Berkshire Hathaway’s novel investments in basic industries.
The deal is Berkshire’s biggest before this it bought Burlington Northern Santa Fe on this account that more than billion in late 2009, excepting Buffett is still on the search for big deals.
In Berkshire’s occurring every year report, Buffett said he is forward the lookout for possible acquisitions — structure references to going big-game hunting with an elephant gun.
The gathering had amassed a cash pile of around billion by the end of be unconsumed year. When Goldman Sachs buys preferred shares back from Berkshire, the security against loss company will pick up an superadded .5 billion.
“Lubrizol changes his acquisition half face by zero,” said Glenn Tongue, intriguing partner who helps manage around 0 the great body of the people at T2 Partners.
Tongue estimates that afterward the Lubrizol deal, Berkshire will again have more than billion of ready money on hand at the end of 2011 grant that the company does not do in ~ degree more acquisitions.
“He characterized the acquisition break in as elephant hunting. Lubrizol is not every elephant — I wouldn’t subsist surprised if he announced an acquisition larger than Burlington Northern this year,” Tongue before-mentioned.
SPECIFIC CRITERIA
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