Bloomberg News

Buffett Says ADM ‘Kind of Company We Look At’ as He Eyes Deals

July 08, 2011

July 8 (Bloomberg) -- Billionaire Warren Buffett may eye Archer Daniels Midland Co., the world’s largest grain processor, as his Berkshire Hathaway Inc. looks for more acquisitions.

ADM, based in Decatur, Illinois, is the “kind of company we look at,’” Berkshire Hathaway chairman Buffett told Bloomberg Television’s Betty Liu on the “In the Loop” program today. General Dynamics Corp. and Exelon Corp. are also the kinds of companies he finds attractive, Buffett said in an interview from Sun Valley, Idaho.

Buffett says Berkshire, based in Omaha, Nebraska, doesn’t currently have any acquisitions in the works, but he “hopes” to see a deal by the end of the year.

ADM rose 17 cents to $30.62 at 10:16 a.m. in New York Stock Exchange composite trading and rose as much as 1.8 percent to $31 after Buffett’s comments. The $19.4 billion market-value company has risen 1.1 percent this year.

ADM is among companies that meet the acquisition criteria listed in Buffett’s annual letter, according to data compiled by Bloomberg in March. Buffett typically prefers “simple” businesses with pretax profit exceeding $75 million, “consistent” earning power, and “good” returns on equity while employing little or no debt, according to his report.

As Berkshire has grown, Buffett has shifted his takeover strategy to focus on “capital-intensive businesses,” such as power producers and railroads, which require consistent investment in infrastructure and equipment.

ADM may earn net income of $2.19 billion, or $3.33 a share, in fiscal 2011, up from $1.9 billion, or $3 a share, a year earlier, according to a Bloomberg survey. The company will report earnings for fiscal fourth quarter, which ran through June, on Aug. 2.

--Editors: Jessica Resnick-Ault, Steven Frank

To contact the reporters on this story: Shruti Singh in Chicago at ssingh28@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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