Warren E. Buffet,
Date Submitted: 01/06/2004 16:11:14
Category: / Business & Economy / Accounting
Length: 6 pages (1716 words)
Category: / Business & Economy / Accounting
Length: 6 pages (1716 words)
Warren E. Buffet,
Introduction
In August 25, 1995, Warren Buffet, COE of Berkshire Hathaway announced that his company would acquire the rest of the GEICO Corporation. In doing so, this would the GEICO shareholders a 26% premium per share market price, $55.75 per share to $70 per share. Buffet did not propose to change anything about GEICO, which astonished the observer since there wasn't any synergy between the two companies. At the end of the day, Berkshire Hathaway's shares were …
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…acquisition is in the most profitable segment, requiring the least amount of capital expenditures and has the highest identifiable asset base, the financial community and investors are anticipating a rise in the overall company's return, etc. GEICO is most likely anticipated as a provider or source of cash since it doesn't requires large capital outlays as the Home furnishings segment. This may lead to a larger than normal increase in dividends in the stock price.
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