Berkshire Hathaway Inc. (NYSE:BRK.B)’s CEO, Warren Buffett, decided to “play strings on automobiles” as he announced on CNBC that a contract of acquisition was signed with Larry Van Tuyl. The subject of the legal agreement is the fifth largest automotive dealership chain Van Tuyl Group, which has been owned by the family for the last 62 years.
It’s not yet known how much Berkshire Hathaway Inc. (NYSE:BRK.B) had to spend for the deal to go through, but it mostly invested in the potential of the company, not the actual thing.
“Yesterday we signed an agreement. Berkshire Hathaway signed an agreement to buy Van Tuyl, which is run by Larry. We’ve known each other for some time. Larry has 78 dealerships, volume of about 9 billion,” said Warren Buffet.
This is the first firm in the automobile industry to be owned by Berkshire Hathaway Inc. (NYSE:BRK.B) and to dissipate some shadows of confusion that might have settled along the way. Van Tuyl is not exactly a company providing dealership services, it’s more of a management consulting firm specialized in the vehicle segment of the economy. It has only 3 offices in the south of US, but covers a lot of independently operated dealerships.
Probably the business caught the interest of Berkshire Hathaway Inc. (NYSE:BRK.B) through its possibility to expand towards the north of US. And since Van Tuyl was based on partnership relations to cover for its expenses, it never had a chance to actually boom, not until recently.
“This partnership approach that he has it worked extraordinarily well. He’s just kept adding dealerships over the years, there’s an insurance company involved, there’s real estate involved,” said Warren Buffet.
This latest acquisition won’t add much to the almost $500 billion assets in the possession of Berkshire Hathaway Inc. (NYSE:BRK.B), but it can grow up to be a significant part of it.
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