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Under the terms now being discussed, MetLife would pay $14 billion to $15 billion for American Life, commonly known as Alico, The New York Times reported. At least $9 billion of that sum would immediately go to the Federal Reserve Bank of New York to redeem preferred stock now being held in a special-purpose vehicle. Additional proceeds would go toward paying down part of a separate, $35 billion credit facility from the New York Fed.
Acquiring Alico would give MetLife a strong presence in Japan where an aging population offers fresh growth opportunities. Alico had about 200 offices, 4,600 consultants or employees, and 10,000 agencies in Japan as of March of last year, according to The Wall Street Journal. The company generates about 70% of its revenue from the Pacific island.
And I'm not alone.
Just look at what some other big-name investors - each also known for their independent thinking - are saying or doing right now:
- Bond king Bill Gross is nervous and raising cash.
- Author, commentator and global-markets guru Jim Rogers has repeatedly said that he's not investing in stocks anywhere in the world right now.
- Hedge-fund heavyweight John Paulson is moving aggressively into gold.
- And investing icon Warren Buffett - never one known for tipping his hand - is candidly stating that the U.S. financial-crisis cleanup is far from complete. The fact that he's reportedly buying more shares of Korean steel dynamo Posco (NYSE ADR: PKX) would punctuate this point.
This kind of uncertainty can be paralyzing, making it tough to decide where - or even if - we should deploy our investments.
Fortunately, we've been here before. And what we learned will allow us to profit no matter what the financial future holds for the U.S. marketplace.
Now Buffet is causing similar complications with a Kraft Foods Inc. (NYSE: KFT) plan to buy Britain's Cadbury PLC (NYSE ADR: CBY), announcing that he's wholly opposed to a plan to issue as many as 370 million Kraft shares to get the deal done. As Kraft's largest shareholder - Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) owns 9.4% of Kraft's common stock - his opinion is likely to carry the day.
Wall Street is furious: Deal fees are not as easy to come by as they used to be, and this transaction promised to be especially juicy - thanks to the spin-offs and share issues Kraft is doing to get the buyout done. Some of those maneuvers won't now be necessary, and if the transaction does get done it will be finalized at a lower price.
From the outset it was clear to me that the Kraft/Cadbury deal represented "managerial capitalism" more than it did shareholder capitalism. And in that battle, I know which side I am on.
I'm with Warren.
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Buffett trimmed Berkshire's holdings in riskier businesses that have uncertain futures, such as newspapers, healthcare companies, and credit ratings agencies in favor of more stable long-term picks such as Wal-Mart Stores Inc. (NYSE: WMT) and ExxonMobil Corp. (NYSE: XOM).
The 13-F filing showed that as of Sept. 30 Berkshire had increased its Wal-Mart holdings by almost 90% over the summer, adding 18 million shares worth nearly $1 billion.
Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) acquired railroad Burlington Northern Santa Fe Corp. (NYSE: BNI) in a deal valued at $44 billion, the largest in Berkshire's history.
Berkshire, which already owns 22.6% of the company, will pay $100 per share in cash and stock for the remainder of Burlington's business. The offer values Burlington stock at a 31.5% premium to its Monday close. The deal, expected to close in the first quarter of next year, includes $10 billion in Burlington debt.