A report carried by Valor Economico indicates that US multi-billionaire Warren Buffet’s Berkshire Hathaway Inc may be mulling an investment in Brasil Foods S.A. The Brazilian firm engages in the production and sale of poultry, pork, beef, milk, dairy products, and processed food products in Brazil and internationally.  The reports have indicated Warren Buffet may be interested in a stake in the Brazilian firm.

According to Valor, executives of Brasil Foods told investors during a meeting sponsored by BTG Pactual, manager of Buffet’s Berkshire Hathaway, an investment company of the billionaire American; that Buffet visited the country and expressed interest in the business’ units. Brasil Foods was formed by the union of Sadia and Perdigão in 2009.

According to Valor, which cited an unnamed person close to the company, Buffett started buying BRF's shares after fund managers at his company visited Brasil Foods units last week. Berkshire Hathaway has no intention to buy the control of the company and so far the acquisition of company's shares represents less than 5% of its capital, said the report.

Berkshire Hathaway is a conglomerate holding company headquartered in Omaha, Nebraska, United States that oversees and manages a number of subsidiary companies. The company averaged an annual growth in book value of 20.3% to its shareholders for the last 44 years, while employing large amounts of capital, and minimal debt. Berkshire Hathaway stock produced a total return of 76% from 2000-2010 versus a negative 11.3% return for the S&P 500.

Warren Buffett is the company's chairman and CEO. Buffett has used the "float" provided by Berkshire Hathaway's insurance operations (paid premiums which are not held in reserves for reported claims and may be invested) to finance his investments. However, analysts have reiterated that Buffet may have a substantial warchest for investments. Berkshire Hathaway is keen on better growth outside of the United States.

Brasil Foods, also called BRF has 42 factories and 120, 000 workers. It turned into the second largest food company in Brazil by revenue, only behind global giant JBS and the tenth largest in the world. Currently Sadia and Perdigão are the main food brands of the company. The company has 60 industrial plants in Brazil and four around the world, has 36 distribution centers, 24 offices around the world and is present in over 110 countries.

23 February 2011