Owen

Buffett: I Was Wrong on Anheuser-Busch

Buffett doesn't believe in hostile takeovers. Capable, cooperative existing management is worth a large premium, as far as he is concerned. When faced with a hostile suitor, otherwise well-run companies often take rash, unexpected actions. We've seen this before. If, in an attempt to thwart InBev, BUD leveraged itself to buy, say, Sapporo Breweries, the result for shareholders could have been disastrous. Ego is a large liability, and when management uses it in lieu of rational business logic, the right place for investors to be is nowhere near.

At $63 a share, Buffett got most of the takeover premium, without taking any of the proxy battle risk. Being humble, he calls it a mistake, but faced with the same situation again, he would do exactly the same, and rightly so.