Buffett’s Firm Buys TTI

Berkshire Hathaway, the Omaha, NE-based holding company owned by billionaire Warren Buffett, on Dec. 22 announced it would buy Fort Worth, TX-based electronics components distributor TTI. The deal, which is scheduled to close in the first quarter of fiscal 2007, includes TTI’s catalog business Mouser Electronics.

Founded in 1971, TTI employs more than 1,700 people at more than 50 locations in North America, Europe, and Asia. The company reported sales of $835 million in 2005 and projected about $1.2 billion for 2006. According to TTI’s chief marketing officer Craig Conrad, the resistors, capacitors, and other parts TTI distributes represent about 85% of the parts on any circuit board inside a computer or other electronic device.

Mouser Electronics focuses on introducing new products and technologies to electronic design engineers. Mouser’s 1,800-plus page catalog is published every 90 days, and its Website sells more than 730,000 products from more than 300 manufacturers. As part of the Berkshire acquisition, TTI will operate independently; the company’s current management, including CEO Paul Andrews, will remain in place.

Berkshire Hathaway owns more than 60 companies including insurance, clothing, furniture, jewelry, and candy firms, as well as restaurants, natural gas companies, and corporate jet providers. It has major investments in such businesses as Coca-Cola Co., Anheuser-Busch Cos., Wells Fargo & Co., American Express, Dairy Queen, Fruit of the Loom, and GEICO. Berkshire’s holdings in the catalog/retail sector include Helzberg Diamonds and See’s Candies.

Berkshire is “a pretty eclectic mix of businesses” with a lot of capital available for acquisitions, says Tom Kersting, a research analyst with the St. Louis-based investment firm Edward Jones who covers Berkshire Hathaway regularly. Although terms of the deal were not disclosed, Kersting says, “the way Warren Buffett and Berkshire Hathaway operate, they almost never get involved in a bidding process.” Most likely, he says, “TTI likely is a growing business and went to Berkshire Hathaway and asked if they would buy them and fund their growth.”

As with any holding company, “deals that make sense for Berkshire are any deals that add value to things and can add value to shareholders,” Kersting says. “If [Buffett] believes TTI has a good management team and the price he paid was smart, then it makes sense for them.”

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