Filed under: Deals, Rumors, Rants and raves, Berkshire Hathaway (BRK.A), Washington Mutual (WM), Wells Fargo (WFC)
Yesterday I heard one of many rumors about what might happen to Washington Mutual (NYSE: WM) and this one concerned “my pal Warren“ having an interest in acquiring a position in the bank. At first I paid no attention but then I thought about how beautiful that would be. For Warren Buffett, it would elevate business to an art form, something he’s admired for the world over.
In a previous post, Icahn should raid WaMu before Chase or Wells — Act III, I had some thoughts about the corporate raider and value builder and all the strategic ramifications these intertwined companies might have; but that was all business.
For Warren Buffett, the Oracle of Omaha and chairman of Berkshire Hathaway (NYSE: BRK.A), a merger would surely be a thing of beauty. You see my fantasy goes like this: Berkshire acquires shares of WaMu in the open market, building a position as Buffett so often does in an undervalued company until he controls 8% to 10% of the stock. He then takes a seat on the board and creates his own merger & acquisition committee. From there, he negotiates a buyout with none other than Wells Fargo (NYSE: WFC) another bank he holds a major position in, a position that has been growing.
WaMu shares would escalate in value rapidly once it was learned that Buffett had purchased in, raising the price WFC would have to pay. As long as Buffett calculated the deal to be a net gain for Berkshire Hathaway shareholders and WFC gained as I described in Wells chasing Chase for WaMu — Act II, then you could hang the agreement in the Louvre right next to the Mona Lisa.
In my fantasy the story ends with Carl Icahn and James Dimon, CEO of J P Morgan Chase (NYSE: JPM) staring at the agreement from behind the ropes in the museum shaking their heads and smiling, astonished and envious that Buffett got their first, beating everyone to the deal — again.
Message to Warren: Is there room for one more person on your committee? I want to help negotiate the deal!
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of BRK.B and WM.
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