OMAHA, NE and SAN FRANCISCO: Berkshire Hathaway has announced a definitive agreement to acquire Business Wire. Terms of the transaction were not disclosed.
NEW YORK: Berkshire Hathaway, the investment company owned by billionaire Warren Buffett, has announced plans to acquire Business Wire. The deal is expected to close in the first quarter of this year.
Sources have estimated the deal at $500 million. Business Wire could not confirm.
Cathy Baron Tamraz will continue as president and CEO of Business Wire. Founder Lorry Lokey will remain as chairman.
Buffett said that in choosing to acquire Business Wire, he was more concerned with the company structure than the type of company. Business Wire's management, in particular, was a major selling point.
"We wouldn't have done it if we didn't have Cathy [Tamraz] as CEO," he told PRWeek. "There would've been no deal."
Tamraz said she first approached Buffett in November 2005, after reading an article about him in The Wall Street Journal. She sent him a letter, which prompted a return call.
"It was done in a real old-fashioned and straightforward way," she added.
Tamraz said Business Wire's daily operations would be unchanged by the deal, and there will be no staff changes. Buffett added that he has no interest in getting involved, beyond occasionally helping to secure clients with whom he might have a relationship.
"It's an industry we like, but we didn't set out to go into the business. We don't go in to change things," he said. "They know their business. If they need our help, we don't want to buy the company."
In an industry that is often viewed as a duopoly, Tamraz maintained that the affiliation with Buffett could only help Business Wire's reputation.
"Having the Berkshire brand added to the Business Wire brand is a tremendous asset for us," she said. "We feel that it's going to pay dividends."
Dave Armon, COO of closest competitor PR Newswire, said he welcomed the continued "professional competition." He added that the deal could be positive for the newswire business as a whole.
"I think it'll have a buoyant effect on the industry," he said. "It's terrific when someone as well respected as Warren Buffett sees the growth opportunity in that industry."
Barry Parr, a media analyst with Jupiter Research, characterized the deal as recognition of the continued relevance of newswires in a society where consumers have a variety of ways to get their news.
"I think the vote of confidence here is in Business Wire in saying that Business Wire is going to represent a valued intermediary, even in a world where the internet eliminates a lot of intermediaries," he said.