By Elaine W. Teague
Last October, Warren Buffett, the investor extraordinaire singled out by Forbes magazine as the nation's second richest man, put frozen-dessert franchisor International Dairy Queen Inc. on his Christmas list--and Santa came through.
With major holdings in a smorgasbord of high-profile companies, including Coca Cola Co. and American Express, Buffett's Berkshire Hathaway Inc., based in Omaha, Nebraska, has acquired Minneapolis-based Dairy Queen, including its Orange Julius and Karmelkorn units. In the deal classified as a merger, Berkshire plunked down more than $585 million in stocks and cash; Dairy Queen will become a wholly owned subsidiary of Berkshire.
"The Berkshire group brings [to the deal] a tremendous amount of credibility," says Charles Mooty, CFO of Dairy Queen. This latest acquisition reaffirms Buffett's reputation for careful, hands-on research prior to making a move: It seems that Buffett made regular stops at a certain local Dairy Queen in his hometown of Omaha throughout the past year.
As Buffett goes from taste-testing to getting a taste of the profits, "I think it'll be a real win for everyone involved," says Mooty. Dairy Queen has nearly 5,800 Dairy stores in the United States, Canada, and other foreign countries, as well as 410 Orange Julius and 45 Karmelkorn locations.