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Good Businesses in Europe


lathinker
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As the recent acquisition proves and Buffett has stated, Berkshire is hungry to buy good European businesses. Buffett has cracked "Code Germany", so there may be more to come. I wanted to ask people (in particular the European members of this forum) if they have an idea which businesses might fit for Berkshire, both listed and unlisted.

Most people will know the definition BRK target: wide and lasting moat, high return on capital, industry he can understand.

 

Maybe the discussion results in some actionable investment ideas. A few starters from Germany:

 

Listed:

- Fuchs Petrolub - German version of Lubrizol

- Rational - kitchen equipment

- Pfeiffer Vacuum - special machines (vacuum pumps)

- Henkel - cosmetics

- Beiersdorf - cosmetics

- Fielmann - Glasses/lenses

- Axel Springer - media/newspapers

 

Unlisted:

- Haribo - iconic candy/sweets

- Bertelsmann - media

- Fischerwerke - screws, screw anchors,...

- Aldi/Lidl - supermarkets

 

Also, a reading recommendation on German "Hiden Champions" for those looking to understand better how these companies operate: http://www.amazon.de/Hidden-Champions-Twenty-First-Century-Strategies/dp/0387981462

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Very good list Lathinker. For Henkel don't forget their massive construction and industrial adhesive business. Henkel will be a really nice elephant for BRK to have if they can get it at the right price.

 

A few names I would like to add to the list:

 

Listed

-Norma Group - Joining products

-Symrise - specialty chemicals

-Brenntag - chemicals distribution

 

Private

-Schluter Systems - construction materials

 

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BRK never bought cosmetics companies and somehow I doubt they will start now. It's a good area, but possibly not something Buffett feels to be within his circle of competence? (I doubt he considered PG or JNJ to be cosmetics companies).

 

I really doubt that BRK will reenter media/newspapers. I think that Buffett is out of that for forever.

 

I also really doubt that BRK would buy supermarkets. I think Tesco has left pretty nasty bruise on that area.

 

Honestly, I also think that Buffett has no edge in clothing: his buys there have been lackluster or failures. But apparently he has not given up on that area.

 

I agree with the rest.

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BRK never bought cosmetics companies and somehow I doubt they will start now. It's a good area, but possibly not something Buffett feels to be within his circle of competence? (I doubt he considered PG or JNJ to be cosmetics companies).

 

I really doubt that BRK will reenter media/newspapers. I think that Buffett is out of that for forever.

 

I also really doubt that BRK would buy supermarkets. I think Tesco has left pretty nasty bruise on that area.

I agree with the rest.

 

Agree. In fact WEB commented recently (forget where, last AGM?) that he recently learned what he didn't know about retail.

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Buffett has rightly said that retail is incredibly tough, but on the other hand Berkshire owns See's, Borsheim, Nebraska Furniture Mart (he might like IKEA if it was for sale ?  ;) ) . Berkshire has been a long term investor in Wal-Mart. So it would be wrong to say they don't do retail.

 

As for "cosmetics", let's rather say strong-brand consumer goods. Berkshire did own Gillette and does own Coca Cola.

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Berkshire did recently offer preferred equity financing for Coty's offer for Avon - so he isn't completely averse to cosmetics if someone else is running it.  I don't remember the terms and the deal didn't go anywhere, but perhaps it was very lucrative financing and nothing more.

 

http://dealbook.nytimes.com/2012/05/10/in-backing-cotys-bid-for-avon-buffett-takes-unusual-step/?_r=0

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http://finance.yahoo.com/news/buffett-sets-sights-german-companies-095117269.html

 

 

Buffett sets sights on German companies

Reuters

 

 

BERLIN, Feb 25 (Reuters) - Renowned U.S. investor Warren Buffett is readying for an acquisition spree in Europe's biggest economy after setting the ball rolling last week with the purchase of a niche German retailer by his Berkshire Hathaway holding company.

 

In an interview with Handelsblatt newspaper on Wednesday, Buffett said that he liked German companies because of the regulatory and legal protection for investors, as well as the global reach of even smaller businesses, such as Detlev Louis Motorrad-Vertriebs, the motorcycle apparel and accessories retailer bought last week.

 

"We are definitely interested in buying more German companies," told the newspaper. "Germany is a great market: lots of people, lots of purchasing power and Germans are productive. We also like the regulatory and legal framework."

 

Buffett, who said he is ready to pay cash for good German companies, said the euro's weakness was only one factor for the decision to ramp up investments in Germany.

 

"The bottom line is that the weak euro is naturally good for acquisitions," he said. "But the euro's exchange rate is not our primary motivation. We simply want to own more good companies in Germany - that's our goal."

 

Asked about past rumours that Berkshire Hathaway was interested in buying German sweet maker Haribo and printing press manufacturer Heidelberger Druckmaschinen, he said: "Sometimes there are reports that we're interested even though it's not true. But if you can arrange a transaction, I'd pay you a fee."

 

Berkshire Hathaway agreed to buy Detlev Louis for a little more than 400 million euros ($456 million).

 

(Reporting by Erik Kirschbaum; Editing by David Goodman)

 

 

Cheers!

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From what I remember of that deal, they got outbid and WB didn't follow up due to valuation reasons. Oh, and Cool wasn't around back then.

 

Avon declined to engage in discussions even after COTY (backed by BRK) raised bid to $24, if memory serves.  The AVP board had a new spiffy CEO from JNJ, who was probably thrilling them with tales of a turnaround to come, so one can somewhat understand.  Bart Becht is running Coty directly currently and both Coty and AVP cited good performance of their strategic partnership in Brazil in the most recent quarter (basically, as I understand it, plugging COTY products into AVP distribution).  Disclosure: Long AVP.

 

 

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Sorry for slightly off-topic, as this is not really a European business - but Exor / Agnelli family is selling Cushman & Wakefield, which would probably be a good fit for either Berkadia or stuck in adjacent to HomeServices.

 

http://www.wsj.com/articles/cushman-wakefield-going-up-for-sale-1424820846?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Wonder how much Berkshire / HomeServices paid for all of the US real estate brokerages that they now own but acquired during their crisis era buying spree? The above report mentions a deal could fetch $2 B for the Italian family's 81% stake in C&W.

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