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Buffett's Berkshire Accelerates Pace of Acquisitions
Sept. 18 (Bloomberg) -- Billionaire investor Warren Buffett's Berkshire Hathaway Inc., which today agreed to buy Constellation Energy Group Inc., is increasing the pace of deals as debt markets freeze up and stocks fall.
The deal to pay $4.7 billion for Constellation is Buffett's eighth acquisition announced since October, compared with six in the prior 12 months, when the largest was a $350 million purchase of an underwear and pajama company. Omaha, Nebraska-based Berkshire, which had $31.2 billion in cash on June 30, is acting as buyouts by competitors slow amid a worldwide credit crunch.
``This is the kind of environment that opens up more opportunities for someone like Berkshire who does still have a lot of cash,'' said Gary Ransom, an analyst with Fox-Pitt Kelton Cochran Caronia Waller. ``Opportunities to put it to work are expanding right now.''
Buffett is making deals at a time when others can't. A yearlong contraction in global credit markets has choked funding for leveraged buyouts and reduced corporations' ability to acquire rivals, shrinking the value of announced mergers 29 percent to $2.29 trillion this year from the same period in 2007, Bloomberg data show.
Investors have been speculating Buffett might bid on financial companies as their market value plunged on losses tied to home loans.
``When the world is zigging, you can count on Buffett to zag,'' said Frank Betz, a partner at Warren, New Jersey-based Carret Zane Capital Management, which holds Berkshire shares. ``While everybody is looking in one direction, Buffett's over in another corner making a deal.''
Buffett transformed Berkshire from a failing textile maker into an enterprise with businesses ranging from ice cream and underwear to corporate jet leasing.
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