American Express is the type of company that interests Buffett.
At a take out price of $100 per share, AXP will have a market cap just shy of $90 billion mark.
Warren Buffett’s #Berkshire Hathaway #BRK.A announced that it has applied with the Federal Reserve Board for permission to retain voting shares of American Express $AXP reflecting ownership of up to 24.99% of the amount outstanding. Before this filing, Berkshire was the major shareholder at 16.77% followed by Vanguard’s 5.4% stake.
Buffett has amassed over $90 billion in cash and market chatter has been that a mega deal could be announced shortly by the Oracle of Omaha. Among names mentioned have been Costco $COST and Nike $NKE.
Even at 86, #Buffett is eager to show that he’s far from done building his empire — and that he can top his largest takeover, the $34 billion purchase of railroad Burlington Northern Santa Fe in 2010. Some have argued that he wants to do a $100 billion deal before he departs.
Neither Nike nor Costco have indicated that they would be open to a deal. Another thing can be pretty much counted out: a hostile bid. Buffett has said he doesn’t chase deals. He recently pulled an offer with Kraft Heinz Co. for Unilever $UL — which has a market capitalization of roughly $150 billion — because UL, the consumer products giant deemed it unfriendly. But with AXP there would not be such a potential opposition. Buffett has said that he wouldn’t want to own a bank because of the regulation that would come along with it.
American Express is the type of company that interests Buffett. He understands the business and he is an insider. If he has raised his stake to 25%, why not go ahead and buy the rest of the shares. AXP earnings per share have grown from $3.91 per share in 2012 to $5.56 per share in 2016. The growth in EPS has come while the long term debt has been reduced from $59 million to $47 million in the respective period. At a take out price of $100 per share, AXP will have a market cap just shy of $90 billion mark.
American Express shares last traded at $76.92.
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