Berkshire Proposes to Acquire Remaining Wesco!

[netnet]

You can always buy some shares of DJCO and see Charlie up close.  This year, there were only 30 people at the DJCO's annual meeting. The DJCO meeting was held in a conference room at DJCO's HQ downtown LA.

 

What time of year is this held? Does Charlie actually speak? I've looked at their site, but the investor relation sections simply links to the SEC filings. Thanks!

 

I was wondering that myself, whether or not Charlie talked at length during that meeting.

[brker_guy]

stahleyp and netnet, the DJCO's annual meeting was held in Feb.  Yes, Charlie did speak.  It started at 9AM.  Charlie spoke for about an hour or so.  Then, he fielded questions from us.  There were about 30 people in the room, and it was quite cozy.  it ended at around noon.  So, we got some really good quality time with Charlie.  Like WSC, Charlie was in his elements.

[mmiller]

The just released letter from Mr. Buffett to the BOD at Wesco...

 

Berkshire Hathaway Inc.

1440 Kiewit Plaza

Omaha, Nebraska 68131

 

Telephone (402) 346-1400

Facsimile (402) 346-0476

 

September 1, 2010

 

Board of Directors

Wesco Financial Corporation

301 East Colorado Blvd., Suite 300

Pasadena, CA 91101

 

Dear Board:

 

As you know, Berkshire and I made a filing with the Securities and Exchange Commission last week announcing our interest in acquiring the shares of Wesco Financial Corporation that we don’t already own. I’m writing you this letter to provide you with a proposal for you to consider.

 

1. I want the transaction to be tax-free for any Wesco stockholder who wants it to be. Thus, each Wesco stockholder would be able to choose between shares of Berkshire Class B common stock or the equivalent cash value, in whatever proportions they choose, without issuance of fractional Class B shares.

 

2. The price per Wesco share would be based on the per share shareholders’ equity of Wesco determined reasonably contemporaneous with the closing. That’s what we think of as “book value”. To determine shareholders’ equity we would start with shareholders’ equity as stated in the September 30, 2010 Wesco unaudited financial statements (assuming a 2010 closing) and adjust that based on (i) an estimate of retained earnings from October 1 to the date of the special meeting and (ii) changes in the fair value of investment securities carried at fair value in Wesco’s financial statements as of a date shortly before the special meeting, adjusted to reflect associated changes in deferred tax liability. Accretion of interest or dividend income would be “single-counted” in (i) or (ii), but not in both, in accordance with Wesco’s normal practices. Per share shareholders’ equity would be obtained by dividing shareholders’ equity by the number of outstanding shares of Wesco, which we assume will be the 7,119,807 shares outstanding today.

 

If the transaction is approved, the closing would occur promptly after conclusion of the special meeting.

 

The foregoing will determine the cash price per share.

 

To determine the exchange ratio of Wesco-into-Berkshire Class B stock, we would divide this cash price per share by the volume weighted average price (“VWAP”) of Berkshire’s Class B common stock over a period ending shortly before the special meeting.

 

3. Given the various relationships between Berkshire and Wesco, we expect that you will form a special committee of the Board of Directors to consider this proposal. We will not move forward with a transaction unless it is approved by the special committee (or by a majority of the independent directors, if you do not form a special committee).

 

4. There are a few other conditions to our proposal as well. We will not do a transaction unless it is approved by a majority of the shares of Wesco voted at the meeting that are not owned by Berkshire. The transaction is also subject to the approval of Berkshire’s Board of Directors.

 

5. We anticipate that the deal would be structured as a merger of Wesco with a direct or indirect wholly owned subsidiary of Berkshire. We would like to be in a position to close the merger before the end of this year.

 

We believe that this proposal is in the best interests of Wesco and its minority stockholders. Our proposal provides them with the ability to receive shares of Berkshire stock on a tax-free basis, which will allow them to participate not only in the future of Wesco, but also in the future of all of Berkshire.

 

You should be aware that, due to Wesco’s existing interrelationships with Berkshire, particularly in reinsurance, Berkshire is not interested in selling its Wesco shares to a third party. We believe the price we are offering is fair, and consequently have no interest in effecting a transaction at a higher price. But if the special committee or holders of a majority of the non-Berkshire-owned shares of Wesco disagree with our evaluation, there will be no hard feelings on our part. Wesco will continue as an 80.1%-owned subsidiary of Berkshire, and will operate as it does presently. It will have the same relationships with Berkshire that it enjoys today, with its present management working to increase its value in a manner that benefits equally both Berkshire and public shareholders.

 

The lawyers told me to remind you that this is a non-binding proposal, and that no formal agreement between us with respect to the proposal will be created until the definitive documentation has been executed and approved by our respective Boards of Directors. If you have any questions about the proposal, please don’t hesitate to call me.

 

Sincerely,

 

/s/ Warren E. Buffett

 

Warren E. Buffett