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Buffett dons biker gear with German deal - FT.com

February 20, 2015 12:22 pm

Buffett dons biker gear with German deal

Stephen Foley in New York

Reuters

Warren Buffett: 'The US is my first love, but I see terrific possibilities for us in Europe'

Warren Buffett is adding biker gear to Berkshire Hathaways swelling family of businesses, in
what the billionaire investor hopes will be a door opener to more acquisitions in Europe.
Berkshire on Friday signed a deal to acquire Detlev Louis
Motorradvertriebs, a Hamburg-based retailer of motorcycle apparel and accessories, for a little
over 400m after years hunting for companies to buy outside the US, largely fruitlessly.
There is nothing like a deal to get peoples attention, Mr Buffett said. This is smaller than
something we would normally do, but it is a door opener. I like the fact that we have cracked
the code in Germany.
Louis fits the mould of typical Berkshire acquisitions, in being a family business whose owner
rejected the idea of selling to private equity or to a rival. It will remain a standalone subsidiary
of Berkshire, overseen by one of Mr Buffetts investment lieutenants, Ted Weschler.
Mr Buffett worries that, while many American family business owners consider Berkshire as a
potential acquirer, he is less well known outside the country, limiting opportunities to expand a
company that has already grown to be the third largest in the US.
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Buffett dons biker gear with German deal - FT.com

Ute Louis, who inherited the retailer from her late husband in 2012, contacted Berkshire via a
network of intermediaries. Her financial adviser, Zypora Kupferberg, had previously worked
with Omaha-based adviser Jim Zipursky, whose father, Morley, has known Mr Buffett for
decades.
Louis has 71 stores in Germany and Austria, and also sells through catalogue and an ecommerce
site aimed at the biker community. It has gross revenues of 270m annually and employs
1,600 people.
He told the Financial Times on Friday that Europe
is a natural location for what he calls elephant
hunting searching for big acquisitions and
said that the continents current economic issues
would not dissuade him.
Berkshire has a cash pile of $56bn to make
acquisitions, but ultimately needs to find large
businesses to make a difference to its performance.
The company celebrates 50 years under Mr
Buffetts control this year, and the debate about
whether it should be broken up has grown louder.
Mr Buffett is planning a robust defence of the
companys enduring values in his annual letter to
shareholders, due out on February 28.
Europe has hundreds of millions of people, high
incomes, productive people, so it is a great place to
be, he said. The US is my first love, but I see
terrific possibilities for us in Europe.
The US accounts for 85 per cent of Berkshires
revenue, according to its most recent annual
report. Its biggest overseas acquisition was the
$4bn purchase of a controlling stake in Iscar
Metalworking of Israel in 2006. In 2013, a
Berkshire subsidiary paid $1.1bn for two divisions
of London-listed IMI.
The Louis deal is notable for the role played by Mr
Weschler, who along with Todd Combs has been
taking a larger role within Berkshire. The two men
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Buffett dons biker gear with German deal - FT.com

have been given a proportion of Berkshires stock

portfolio to manage, but are also aiding Mr Buffett
on deals. Mr Combs was instrumental in the recent
purchase of Duracell from Procter & Gamble.
RELATED TOPICS United States of America,
Mergers & Acquisitions

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Buffett dons biker gear with German deal - FT.com

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