Warren Buffett is getting into the automobile sales business.
The billionaire’s Berkshire Hathaway, owner of businesses ranging from the BNSF railroad to Dairy Queen, Geico insurance and power providers, is buying the privately owned auto dealership company Van Tuyl Group.
Financial terms were not disclosed.
Van Tuyl Group says it is the biggest privately owned auto dealership group in the US. It has 78 independently operated dealerships and more than 100 franchises in 10 states.
The company will be renamed Berkshire Hathaway Automotive and be based in Dallas.
Buffett, in an interview on CNBC on Thursday, said that there are huge opportunities for market consolidation in the fragmented auto dealership business.
This deal is one of a handful of times Buffett has applied his conglomerate’s name to one of the businesses it owns.
Originally, Berkshire Hathaway was the name of the struggling New England textile company that Buffett took control of in the 1960s. Buffett later closed the textile mills, but he has built Berkshire Hathaway into a conglomerate known for its financial strength.
Van Tuyl Group’s current chief executive officer, Larry Van Tuyl, will become chairman of the auto unit and Jeff Rachor will take over his role once Larry Van Tuyl transitions to the chairman position.
Buffett said that Van Tuyl’s job will be to scout out dealerships for potential acquisitions and determine which ones to pursue.
Buffett will provide the funding for any possible transactions.
“We’ve got the capital, so we’re off to the races,” he said.
Berkshire investor and biographer Andy Kilpatrick said this deal looks like it represents another long-term move into a new business for the company.
Also, it puts some of Berkshire’s roughly US$55 billion cash to work.
“I think it’s a major operating business,” said Kilpatrick, who wrote Of Permanent Value: The Story of Warren Buffett.
Stifel analyst James Albertine said the deal puts Omaha, Nebraska-based Berkshire in a good position to take advantage of trends in the industry and acquire dealers who either need to plan for succession or need capital to invest.
“We continue to believe the opportunity to consolidate the auto dealership sector presents one of the best medium to long-term growth opportunities across retail,” Albertine said in a research note.
The deal is expected to close in next year’s first quarter.
It still needs approval from major auto manufacturers.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
RSS