By Andrew Frye
Oct. 6 (Bloomberg) -- Warren Buffett, who as chief executive officer of Berkshire Hathaway Inc. has overseen more than $50 billion in acquisitions, said the 2002 purchase of farm-products provider CTB Inc. was “a lucky day.”
“We’re going to own CTB forever,” Buffett told employees of the Milford, Indiana-based agricultural-services firm. “The operational results, the acquisitions that you’ve made, everything has exceeded my expectations.”
CTB, which sells feeders and stalls under the PigTek and Chore-Time Hog brands, has expanded abroad since the Berkshire takeover by buying businesses in Israel, Germany and the Netherlands. Chief Executive Officer Victor Mancinelli, who convinced Buffett to buy the firm seven years ago, is making “excellent returns,” according to the Berkshire annual letter to shareholders published this year.
“Over the next 100 years we’re going to have some bad farm years and we’re going to have some bad years in the economy,” Buffett said in the address, which was posted on CTB’s Web site and labeled September. “But just look at the progress we’ve made over time. And I hope you’re doing more of the same.”
Buffett, 79, has responded to the U.S. recession by cutting manufacturing jobs and closing facilities. He oversees businesses ranging from insurance and ice cream to corporate jets and power plants. Profit from the firm’s “other manufacturing” units, such as CTB, paint-maker Benjamin Moore and apparel company Fruit of the Loom, fell 18 percent to $1.68 billion in 2008.
Buffett didn’t respond to a request for comment sent in an e-mail to assistant Carrie Kizer.
Berkshire’s acquisition of CTB was valued at $177 million, according to Bloomberg data. Six years later, in 2008, the unit produced pretax earnings of $89 million, Buffett said in the annual letter. CTB bought six companies in the interim, including Swine Services Specialists Inc. and Porcon group of Deurne, the Netherlands.
Buffett built Berkshire into a $150 billion company by buying businesses like auto insurer Geico Corp. and stocks including Coca-Cola Co. that he believes have competitive advantages and enduring brand popularity. He said in the address to employees that he refused an initial proposal to bid for CTB, reversing his decision only after Mancinelli made a trip to Omaha, Nebraska, where Berkshire is based.
“Boy was that a lucky day for Berkshire,” Buffett said. “I spent a little time talking to him and I knew that he was the right guy and CTB was the right company.”
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