Belfast Telegraph

Thursday 25 December 2014

Buffett 'salivating' to spend £25bn on buying companies

Warren Buffett sees clear signs that the global economy is slowing, although the US economy is "inching ahead" as other regions decline, according to the Berkshire Hathaway chief.

Yet despite the weakness, Buffett said he was "salivating" to make another major acquisition, adding that two deals of around $20bn (£12.5bn) each had fallen through this year. In an interview on CNBC, Buffett said the rate of decline was larger in Asia than in Europe, although the Asian economies are declining off a higher base.

At the same time, he said Berkshire's US housing-related businesses were growing at double digit rates of late.

Buffett has maintained that the economy will not truly start to turn around until the housing market improves, and he said that housing had clearly started to turn. Berkshire is heavily exposed to housing construction, as it owns a brick maker, a carpet maker, a real estate company and the largest builder of manufactured homes.

Yet even with growth from its existing portfolio companies, Berkshire is always on the hunt to expand by acquisition.

Buffett told CNBC: "I'm salivating to spend some of Berkshire's $40bn (£25bn) cash pile on a deal." At Berkshire's annual meeting in May, he said a $20bn (£12.5bn) deal had recently fallen through, and he acknowledged a second one had come apart as well.

He did not give any indication as to what kinds of companies were involved.

In a wide-ranging interview, Buffett also said the best thing for the economy would be for US Federal Reserve chairman Ben Bernanke to stay on for a third term. With the presidential race running neck-and-neck, there has been speculation of late that Republican candidate Mitt Romney, if elected, would seek a new Fed chairman when Bernanke's term expires in 2014.

Buffett disagreed with the idea.

"I would vote for Bernanke again, and I'd get my kids out and everybody else to vote for him," he said.

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