Buffett wants to cut cash pile, mulls $15B deal
Says the company will "likely" have significantly less cash in three years' time.
OMAHA, Neb. (Reuters) - Warren Buffett said Saturday he wanted to reduce Berkshire Hathaway Inc.'s cash pile and that there was a small chance he would make an acquisition that could take up to $15 billion of cash.
Buffett, speaking at Berkshire's annual meeting, said the company did not need anything like the about $40 billion it has in cash. He said it was "likely but far from certain" that the company would have significantly less cash in about three years' time. He wants to translate the cash into earning power.
Buffett added that he expected to get more opportunities for acquisitions in the utilities field. In March, Berkshire's MidAmerican Energy Holdings Co. unit acquired the western U.S. utility PacifiCorp from Scottish Power Plc for $5.1 billion in cash, Buffett's biggest purchase in eight years.
Berkshire's earnings released Friday showed the company's cash position fell to $42.86 billion from a revised $45.02 billion at year end.
Friday, Berkshire moved to boost its international presence, announcing it would buy 80 percent of Israel's Iscar Metalworking Cos. in a transaction valuing the closely held tool firm at $5 billion.
The Iscar deal helps fulfill Buffett's long-stated desire to make "major" acquisitions, which he said in March were needed to produce "truly satisfactory gains" in operating earnings at Berkshire, his insurance and investment company.
Buffett described Iscar Saturday as an "an important acquisition." He said it was a "large, extremely well-managed profitable" company which he had been introduced to in October.
Berkshire also said Friday that its first-quarter profit rose 70 percent to $2.31 billion, or $1,501 per share, helped by increasing auto insurance premiums and a successful bet the U.S. dollar would fall.
Buffet said Saturday that Berkshire's auto insurer Geico had a "very good quarter," and its reinsurance operations had a good quarter.
But he said the quarterly figures were not terribly important in the long run. "Things have been working very well in all four sectors -- that's nice but not terribly important five years from now," he said.