By Charles Penty and Ben Sills
May 21 2008 (Bloomberg) -- Billionaire Warren Buffett, speaking in Madrid during his four-day European tour, said he made a mistake by not visiting the continent 10 years ago to seek acquisitions for his Berkshire Hathaway Inc.
``There are going to be more large acquisitions, possibly, in Europe than in any part of the globe,'' said Buffett at a news conference today. After visiting Frankfurt and Lausanne, he wraps up his trip tomorrow in Milan as he looks to buy family-owned companies to boost earnings at Berkshire.
An economic boom lasting more than a decade helped swell the ranks of Spanish companies large enough to meet Buffett's minimum requirement of $75 million in pretax earnings. About 50 family- owned businesses including retailers El Corte Ingles and Mercadona and builder Grupo Ferrovial SA earn annual revenue of more than 1.2 billion euros ($1.89 billion), said Josep Tapies, professor of strategic management at IESE Business School.
``Spain has family-owned companies that have done their homework by becoming more diversified, professional and growing abroad,'' said Tapies, who teaches family business at IESE, the world's third-best business school according to the Economist Intelligence Unit. ``Many of their owners would be able to identify entirely with Buffett's methods and objectives.''
The Berkshire chairman is known for buying privately owned companies with iconic brands and barriers to would-be rivals. Buffett, unlike private equity firms, says he buys ``for life'' and doesn't meddle in management. He's been looking for places to put Berkshire's $35 billion in cash, investing in China, Israel and the U.K. because he says there's a dearth of U.S. opportunities.
Family Business
Spain has 2.8 million family companies, about 16 percent of the total in the European Union, according to Spain's Family Business Institute.
``I'd love to get a phone call from Spain,'' Buffett said today. He said he came to Europe ``to expose ourselves to large businesses that we can understand and we can analyze, with some kind of durable competitive advantage. Particularly with able, trustworthy management.''
Buffett, 77, owns about a third of Berkshire, which he built over four decades from a failing maker of men's suit linings into a holding company with businesses that range from candy-making to insurance. He is ranked by Forbes magazine as the world's richest man.
Berkshire earned $13.2 billion last year and has a $72.6 billion stock portfolio. Berkshire is the largest shareholder in companies including Coca-Cola Co., Wells Fargo & Co., Kraft Foods Inc., American Express Co. and Moody's Corp. as of March 31, according to Bloomberg data.
Moody's Corp.
Buffett said there will still be demand for credit ratings by Moody's, whose stock plunged the most in nine years on reports that a computer error may have caused erroneous grades.
``I don't think the need for ratings agencies will go away,'' said Buffett. Berkshire has a 19.6 percent stake in Moody's.
To contact the reporters on this story: Charles Penty in Madrid at cpenty@bloomberg.net; Ben Sills in Madrid at bsills@bloomberg.net
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