1994: Why did Berkshire sell a portion of its Cap Cities Investment?

AUDIENCE MEMBER: My second question is, I was just curious why you sold a portion of Cap Cities?

WARREN BUFFETT: We thought that — we thought it was a good idea for Cap Cities to have a tender offer. They had cash that we thought that they could not use in any — they were not likely to be able to use — in a better way than repurchasing their own shares because they do have some very good businesses.

They, and we, felt that a tender offer would not be successful, in terms of attracting a number of shares unless Berkshire were tendering. We felt the price was reasonable to tender at.

It turned out that the business was getting stronger during that period and various things were happening in media, so there were only 100,000 shares or so tendered outside of our million. That isn’t necessarily what we thought was going to happen going in, but that is what happened.

It’s acceptable to us, but that doesn’t mean that it was the desired outcome. We would not have tendered all of our shares or anything of the sort.

We want to remain a substantial shareholder of Cap Cities. We’ve always — most of the time we favored Cap Cities buying in its stock and it’s bought in a fair amount of stock since the ABC merger took place in 19 — started in 1986.