Warren Buffett (NYSE:BRK.B), the famous "Oracle of Omaha," continues to surprise the investment community with his aggressive purchases of companies that he feels have value for the future. Buffett's holding company, Berkshire Hathaway (NYSE:BRK.A), announced plans to purchase the British beverage company divisions of IMI PLC (LON:IMI). Many investors are considering how this buy will complement the lauded investor's other holdings.
About IMI PLC
IMI PLC is a large engineering and holding firm that has been listed on the London Stock Exchange since 1966. IMI got its start over a hundred years ago when it was a metal percussion cap factory started by Scotsman George Kynoch in 1862. The company soon began to diversify into a variety of manufactured goods. By 1962, it took the name Imperial Metal Industries Limited, or IMI for short. Today, IMI encompasses a large range of businesses including engineering and controls, fluid power controls, indoor climate control systems, beverage dispensing and retail merchandising and point-of-sale solutions. The Buffett deal includes drink dispensing and retail merchandising divisions of the company.
How IMI Helps Buffett's Holdings
Buffett seems to have set his sights on smaller, value-rich acquisitions instead of large companies lately, encouraging his operators to seek out these opportunities on a selective basis. IMI's beverage dispensing unit provides equipment for drink sales in public areas such as convenience stores, fast food restaurants and hospitals. The acquisition of the beverage dispensing and retail merchandising divisions fit in strategically with Berkshire-Marmon's retail and food service holdings. Berkshire Hathaway is already the largest holder of Coca-Cola stock and feels the IMI move will fit it well with its other holdings.
Reports say the deal was made on behalf of Berkshire's Marmon Group at a price of $1.1 billion. IMI plans to return a significant portion of the purchase price to shareholders and use the rest to support the group's pension fund.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.