Warren Watch: Buffett had helping hand in Oriental Trading acquisition

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Posted: Sunday, June 30, 2013 12:00 am

Oriental Trading Co. has made acquisitions under previous owners, but the plan announced last week to purchase MindWare Holdings Inc. was the first since CEO Sam Taylor arrived and the first since Berkshire Hathaway Inc. became Oriental Trading's parent company.

Last year, when Taylor approached Berkshire Chairman and CEO Warren Buffett about buying Oriental Trading, he asked how involved Buffett would be in the business. Buffett answered that his philosophy is autonomy for top managers but that he should be informed about acquisitions.

So Taylor brought the MindWare proposal to Buffett.

“I knew we'd have to run this by Warren and get his blessing,” Taylor said, “mostly to make sure not to overpay for acquisitions. He was very helpful in helping us size it, to come up with our value we were going to offer.”

MindWare owner Martin Smith accepted the cash offer, which hasn't been disclosed, in part because Berkshire would provide a permanent home for the company and its staff within Oriental Trading.

MindWare is a “bolt-on” transaction for Berkshire, meaning that it becomes part of an existing Berkshire company, and 2012 was a record year for such transactions at Berkshire.

“Warren loves these bolt-on acquisitions,” Taylor said. “He likes that it's a low risk, not a burden on headquarters and expands the roles for proven managers that Berkshire has. He encourages us to look for these kinds of opportunities.”

Buffett, meanwhile, is looking for bigger acquisitions, using a hunting metaphor that has him loading billions of dollars worth of “ammunition” into his “elephant gun.”

Taylor — whose businesses aims at generating fun for its customers — said he's hunting for more acquisitions, too. “This one was within our grasp,” he said. “We loaded up our BB gun.”

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LeBron's coach?

Nike and Buffett are among those praising the second consecutive pro basketball championship by the Miami Heat and the team's leader, paid Nike spokesman LeBron James.

An online commercial shows an answering machine playing Le- Bron's greeting: “You've reached LeBron. Please leave a message.”

There's a “beep,” and a voice says:

“Hey, LeBron. It's Warren Buffett. Sure glad you're using that hook shot that I taught ya.”

Then follow other messages, including one from Duke University basketball coach Mike Krzyzewski:

“Hey, LeBron. ... Wow. Two in a row.”

Nike Chairman Philip Knight:

“Hey, LeBron. ... Fantastic year. You might really be worth all that money we pay ya.”

And NBA legend Bill Russell:

“LeBron. ... Remember, almost anybody can win one. Welcome to the circle. OK, hold on a second. My other phone's ringing.”

The ad invites people to “hit Le-Bron” and offers a telephone number, which is answered by LeBron's voice and inviting more messages.

Geico and growth

Geico opened a regional sales office in suburban Buffalo, N.Y., with 300 workers nine years ago and now has 2,500, cause for a celebration that attracted Buffett, along with New York Lt. Gov. Robert Duffy.

The office in Getzville has helped Geico grow, Buffett said, calling New York “a wonderful state to operate in.”

“It ain't over yet, fellas,” Buffett told a gathering to mark the employment milestone, according to the Buffalo News. “We're going on from here.”

National Underwriter magazine said Berkshire passed Allstate in 2012 to become the second-largest U.S. property-casualty insurance company, counting Geico, National Indemnity of Omaha and other Berkshire-owned companies.

Berkshire's net premiums written, a measure of sales, totaled $27.25 billion in 2012, a 12.1 percent increase that was the largest percentage gain among the 20 biggest property-casualty groups. State Farm remains the biggest with $53 billion.

Tax credits for Richline

Berkshire jewelry maker Richline Group Inc. has received $400,000 in tax credits from the State of Massachusetts, the Boston Globe reported. In return, Richline pledged to create 100 new jobs and invest $3.6 million in equipment and improvements at a plant it recently purchased in Attleboro, Mass.

Richline was one of 10 businesses receiving $11.9 million in tax credits from the state's Economic Assistance Coordinating Council.

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

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