By Andrew Frye <\/p>\n
March 23 (Bloomberg) — Warren Buffett\u2019s Berkshire Hathaway Inc., which agreed yesterday to buy the closely held parent of alcoholic-beverage wholesaler Empire Distributors, said it plans to seek more purchases in the industry.<\/p>\n
\u201cWe expect that the Empire acquisition will provide us with a solid platform for potentially acquiring other similar high-quality wholesale distributors,\u201d Buffett, Berkshire\u2019s chairman and chief executive officer, said in a statement. Terms of the deal for Kahn Ventures Inc. of North Carolina weren\u2019t disclosed.<\/p>\n
Buffett is looking for ways to invest Berkshire\u2019s cash after markets recovered last year and profits jumped. The 79- year-old billionaire, who built Berkshire through four decades of takeovers and stock picks, completed the biggest acquisition of his career last month with the $27 billion deal for railroad Burlington Northern Santa Fe Corp. Berkshire\u2019s McLane unit, which had revenue of $31.2 billion last year, will own Empire.<\/p>\n
\u201cIt\u2019s just planting seeds,\u201d Michael Yoshikami, chief investment strategist at Berkshire shareholder YCMNet Advisors, said of the Empire purchase. \u201cIt looks like they\u2019re getting into a new area that they\u2019re going to try to get some expertise in, and trying to expand.\u201d<\/p>\n
Buffett transformed Berkshire from a failing textile mill to a company with a market value of $200 billion and more than a hundred units selling products and services including candy, electricity and luxury flights. The Empire acquisition adds to responsibilities of McLane CEO Grady Rosier, whom Buffett praised in his annual letter to investors for turning in record profits as other Berkshire manufacturing, service and retailing units suffered in the economic downturn.<\/p>\n
The Exception<\/p>\n
\u201cAlmost all of the many and widely diverse operations in this sector suffered to one degree or another from 2009\u2019s severe recession,\u201d Buffett said last month in his letter to Berkshire shareholders. \u201cThe major exception was McLane.\u201d<\/p>\n
McLane, which Berkshire bought from Wal-Mart Stores Inc. in 2003, reported 2009 pretax earnings of $344 million, or about 1 cent for every dollar of sales. The unit supplies retailers, drug stores and convenience stores with groceries and other merchandise and gets about a third of its sales from Bentonville, Arkansas-based Wal-Mart.<\/p>\n
\u201cI\u2019m sure that as McLane sees opportunities to grow they will take advantage of them,\u201d said Jeff Matthews, author of \u201cPilgrimage to Warren Buffett\u2019s Omaha\u201d and founder of the hedge fund Ram Partners LP. \u201cThey are working with one of the best balance sheets in the world,\u201d Matthews said, referring to Berkshire\u2019s cash.<\/p>\n
Empire executives will stay in place and the business will remain in the same markets, Berkshire said. Empire distributes spirits, wine and beer in North Carolina and Georgia.<\/p>\n
–With reporting by Jamie McGee in New York. Editors: Dan Reichl, Brett Miller<\/p>\n
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