- Warren Buffett, the billionaire who runs Berkshire Hathaway, has long avoided engaging in bidding wars when buying companies.
- He recently turned down the chance to make a counteroffer for Tiffany & Co. after the jeweler received a takeover bid from LVMH, according to The Financial Times.
- Buffett was also recently outbid by Apollo Global Management for Tech Data, according to CNBC, and has said he will not make another offer.
- Here are five times that Buffett has lost out on a deal because he won't participate in a bidding war.
- Read more on Business Insider.
Warren Buffett, the Omaha-based billionaire who runs Berkshire Hathaway, has long said that he doesn't engage in bidding wars.
He explained his thinking in the 2016 annual letter to Berkshire Hathaway shareholders. "We don't participate in auctions," he wrote.
He continued: "A line from a country song expresses our feeling about new ventures, turnarounds, or auction-like sales: 'When the phone don't ring, you'll know it's me.'"
The practice also extends to counteroffers. After Tiffany & Co. received a takeover bid from LVMH, the company reached out to Buffett and invited him to make a counteroffer, The Financial Times reported on Wednesday. He turned down the opportunity and LVMH struck a $16.2 billion deal for Tiffany & Co. in November.
Earlier in 2019, Berkshire Hathaway was also outbid for Tech Data, a technology distributor, according to CNBC. Then, Tech Data accepted a bid from Apollo Global Management for $145 per share, or $5.14 billion, which topped Buffett's previous bid of $140 per share, or slightly more than $5 billion.
Buffett said that he had no intention of making a higher offer, CNBC reported. Tech Data could solicit other bids until December 9, 2019, according to a company press release.
Now, it appears that Buffett will have to look elsewhere for opportunities to spend down his record $128 billion cash pile. In a 2018 letter to shareholders, Buffett wrote that Berkshire would like to spend its cash making acquisitions.
However, it's become increasingly difficult to find companies that are priced at a deal. "Prices are sky-high for businesses possessing decent long-term prospects," Buffett wrote. Berkshire's last major deal was its 2016 purchase of Precision Castparts Corp. for $32 billion.
Here are four deals that Buffett has lost because he won't engage in a bidding war, in chronological order.
1. Tiffany & Co.
The famous jeweler Tiffany & Co. reached out to Buffett to make a counteroffer after the company received a takeover bid from industry giant LVMH, The Financial Times reported.
Buffett turned down the offer, according to people briefed on the matter. He confirmed to The Financial Times that Tiffany's did approach him.
2. Tech Data
Time of Berkshire Hathaway bid: November 2019
Berkshire Hathaway bid: $5 billion, or $140 per share
Company that outbid: Apollo Global Management
Winning bid: $5.14 billion, or $145 per share
3. Oncor Electric Delivery
Time of Berkshire Hathaway bid: July 2017
Berkshire Hathaway bid: $9 billion
Company that outbid: Sempra Energy
Winning bid: $9.45 billion
4. NYSE Euronext
Time of Berkshire Hathaway bid: Late 2012
Berkshire Hathaway bid: Undisclosed
Company that outbid: Intercontinental Exchange
Winning bid: $8.2 billion
5. Constellation Energy
Time of Berkshire Hathaway bid: September 2008
Berkshire Hathaway bid: $4.7 billion for 100%
Company that outbid:Électricité de France SA
Winning bid: $4.5 billion for 49.9% stake
Sources:CNBC and The Wall Street Journal