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Possible Acquisition Targets for Berkshire... (BRK-A)

February 28, 2012 3:21 PM EST Send to a Friend
Within Berkshire Hathaway Inc.’s (NYSE: BRK-A) annual letter to its investors, Warren Buffett noted he is “on the prowl” for larger acquisitions.

The key to this statement is Buffett is looking for much larger acquisitions. Over the past two years, Berkshire has made multiple large acquisitions as it purchased Wickliffe for $9 billion in 2010 and spent $26.5 billion on Fort Worth.

Buffett said he is currently interested in acquisitions of publicly-traded companies as yields on bonds don’t compensate for the risk of inflation.

According to the requirements listed on the annual letter, Bloomberg believes Stanley Black & Decker Inc. (NYSE: SWK) and Parker Hannifin (NYSE: PH) are two highly potential Fortune 500 companies in which Buffett may try to get his hands on.

“We now have eight subsidiaries that would each be included in the Fortune 500 were they stand-alone companies,” Buffett stated in the letter. “That leaves only 492 to go.”

Bloomberg noted there are a total of 21 companies within the top 500 U.S. companies with: an equity value between $5 billion and $25 billion, a 10-year average annual return on invested capital which topped the average company within the S&P 500 index, capital expenses accounting for at least 10 percent of net fixed assets which received profit growth in the past five years that exceeded the top 50 percent and sold for a lower price-earnings ratio than the S&P 500 median.

Here is a complete list of the companies which meet the requirements.

  • Advance Auto Parts Inc. (NYSE: AAP)

  • AutoZone Inc. (NYSE: AZO)

  • Cooper Industries (NYSE: CBE)

  • Cummins Inc. (NYSE: CMI)

  • DaVita Inc. (NYSE: DVA)

  • Discover Financial Services (NYSE: DFS)

  • Dish Network Corp. (Nasdaq: DISH)

  • Eastman Chemical Co. (NYSE: EMN)

  • Family Dollar Stores Inc. (NYSE: FDO)

  • Flowserve Corp. (NYSE: FLS)

  • Forest Laboratories Inc. (NYSE: FRX)

  • Goodrich Corp. (NYSE: GR)

  • Hormel Foods Corp. (NYSE: HRL)

  • Humana Inc. (NYSE: HUM)

  • KBR Inc. (NYSE: KBR)

  • Parker Hannifin Corp. (NYSE: PH)

  • PPG Industries Inc. (NYSE: PPG)

  • Ross Stores Inc. (Nasdaq: ROST)

  • Sara Lee Corp. (NYSE: SLE)

  • Stanley Black & Decker Inc. (NYSE: SWK)

  • VF Corp. (NYSE: VFC)




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