Warren Buffett said shareholders of his Berkshire Hathaway Inc. may have their financial interests harmed by the company’s planned stock-and-cash deal to take a 100 percent stake in Pasadena-based Wesco Financial Corp.
Using Berkshire stock would dilute investors’ holdings in exchange for more ownership in a firm that may have less growth potential, Buffett told Wesco Director Carolyn Carlburg in a Jan. 21 letter published Monday in a regulatory filing. Berkshire, the top investor in Kraft Foods Inc., last year opposed the foodmaker’s plan to issue shares for an acquisition, saying the stock was “very expensive currency.”
Wesco, which is led by Berkshire Vice Chairman Charles Munger and is 80.1 percent owned by Buffett’s firm, said last month it accepted a deal of about $550 million for the remaining stake and would seek shareholder approval. “We regard the transaction as disadvantageous to Berkshire if a substantial number of Wesco shareholders elect to take Berkshire stock,” Buffett said in the letter. “That’s because I believe the prospects for Berkshire shares over the next 10 years to be considerably better than the prospects for Wesco shares.”
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