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.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said it plans to ship its new 1 megawatt charging systems for electric trucks and buses in the first half of next year at the earliest. The new charging piles, which deliver up to 1 megawatt of charging power, are designed for heavy-duty electric vehicles, and support a maximum current of 1,500 amperes and output of 1,250 volts, Delta said in a news release. “If everything goes smoothly, we could begin shipping those new charging systems as early as in the first half of next year,” a company official said. The new
RSS