Warren Buffett’s charity spread matches Mittal’s menu

NEW YORK: Warren Buffett, the world's second richest man, has announced plans to give away an estimated 85 per cent of his estimated 44-billion-dollar wealth to charity. Most of the donations will, ironically, go to a foundation run by Bill Gates, the wealthiest man on the planet.             

 

The investment guru said in a statement that on Monday he would act on letters sent to Gates and other foundations "that contain irrevocable pledges" to start transferring shares in his Berkshire Hathaway conglomerate to them from July.           

 

He explained the motivation for his gesture in an interview with Fortune magazine, which said the handouts would amount to about 85 per cent of his wealth.    

 

"I know what I want to do," he was quoted as saying, "and it makes sense to get going."               

Buffett, 75, said there were no immediate concerns about his health and that he is still "having fun" working in high finance.              

 

"I feel terrific and when I had my last physical, in October, my doctor gave me a clean bill of health," he said. But he did make a link to the death of his wife, Susan Buffett, in July 2004.   

 

The two had been living apart but remained close and Buffett said: "She and I always assumed that she would inherit my Berkshire stock and be the one who oversaw the distribution of our wealth to society."    

 

Buffett made his billions from astute investments that turned him into a world-acclaimed operator. The son of a stockbroker and member of Congress, Buffett reportedly bought his first shares on the stock market at the age of 11. Virtually all of the money is concentrated in Berkshire Hathaway, which has interests ranging from insurance to property, energy and jet leasing.              

 

The shares will go to five foundations. But more than 83 per cent of the stock will go to the Bill and Melinda Gates Foundation which already has a kitty of about 30 billion dollars used to pay for medical research and give educational grants.   

 

Buffett’s move makes it the largest charitable donation ever made by an individual or a corporation. At a total $68 billion, the Gateses and Buffett are giving away almost the same amount as the combined annual turnover of Arcelor Mittal. The amount is bigger than the GDP of Bangladesh and Kuwait, and a tenth of India’s.           

 

"We are awed by our friend Warren Buffett's decision to use his fortune to address the world's most challenging inequities," Bill and Melinda Gates said in a statement.          

 

"The impact of Warren's generosity will not be fully understood for decades. As we move forward with the work, we do so with a profound sense of responsibility. Working with Warren and with our partners around the world, we have a tremendous opportunity to make a positive difference in people's lives," they said.            

 

Fortune magazine estimated earlier this year that Buffett has about 44 billion dollars. It said Gates is now worth about 50 billion dollars.     

 

According to Fortune, Buffett plans to eventually become a trustee of the Gates foundation. Bill Gates this month announced plans to withdraw from day-to-day control of Microsoft by July 2008 to concentrate on the foundation.   

 

Buffett said in his statement that the value of the first gift to the Gates foundation would enable it to increase spending by about 1.5 billion dollars.              

 

"I greatly admire what the Bill and Melinda Gates Foundation (BMG) is accomplishing and want to materially expand its future capabilities," he said.         

 

"In the future I expect the value of my annual gifts to trend higher in an irregular but eventually substantial manner," he added.              

 

Shares will also be given to the Susan Thompson Buffett Foundation, the Howard G. Buffett Foundation, Susan A. Buffett Foundation and NoVo Foundation (Peter A. Buffett) run in the name of his late wife and by other members of his family.              

 

Buffett said he would set aside 10 million shares of class B common stock for the foundation, and award five per cent of the balance of those shares once a year. On Friday, a Berkshire Hathaway class B share was worth 3,071 dollars on the New York Stock Exchange.    

 

Buffett's wife died of a stroke at the age of 72. Buffett said that his wife had always wanted to give away their money faster.              

 

"I always had the idea that philanthropy was important today but would be equally important in one year, 10 years, 20 years and the future generally."             

 

Buffett's donation tops those by the great philanthropists of the past; Carnegie family givings hit 380 million dollars or 7.6 billion in today's dollars, according to The Washington Post.     

 

With inputs from Bloomberg

 

Arcelor-Mittal union creates $70bn entity...

 

Satish John

MUMBAI: “We got it, we got it,” a delirious Lakshmi Mittal told Wilbur Ross on telephone late on Sunday. He repeated that about 20 times, said Ross.

 

The steel tycoon couldn’t control his excitement when breaking the news of Arcelor’s acquisition to his confidant, American billionaire strategist Ross.

 

At $33.7 billion, the acquisition did not come cheap for Mittal (the Mittal share fell 6.6 per cent on Monday in reaction, while Arcelor’s rose about 7 per cent), but the prize is worth it. The union of Mittal and Arcelor creates a company that controls 10 per cent of world steel production, or 110 million tonnes, three times its closest rival, Nippon Steel of Japan. The combined entity would have pro forma revenues of $71 billion in the current year. And, in a shot, Arcelor-Mittal will escalate to 40th position in the Fortune 500 list.

 

The board of Arcelor, the world’s second largest steel producer, voted unanimously to recommend Mittal’s offer after more than eight hours of deliberation. The turning point came when investors criticised the rules surrounding the June 30 meeting to approve the Severstal bid.  

 

The new company, to be called Arcelor-Mittal and based in Luxembourg, will have more bargaining power with suppliers and customers such as Toyota Motor Corp and Ford Motor Co. Mittal will own about 40 per cent of the combined company. Current shareholders will retain the rest.

 

The combined company’s future will be “thrilling but difficult,” Mittal said at a press conference on Monday. Arcelor chairman Joseph Kinsch was less enthusiastic, understandably so, considering the side he was on. He described the deal as a “marriage of reason”, and hoped it could turn into a “marriage of love”.

 

Mittal was quick to the repartee: “We have been trying to persuade the bride for the last five months that we love her and she should accept our marriage proposal.”

 

Mittal’s wife, his daughter Vanisha, and her husband Amit Bhatia were in Luxembourg to share the moment with him. His son Aditya Mittal shared the dais with him briefly, making a presentation in his capacity as president and chief financial officer of Mittal Steel.

 

Aditya urged Arcelor shareholders to reject the Severstal deal. “Arcelor shareholders must vote down the Severstal transaction on Friday,” he said at the press conference.

 

“Arcelor fought hard and long for this,” said Philippe Gijsels, head of European equity strategy at Fortis Bank SA in Brussels. “It’s the best match.”

 

The man who fought valiantly to fend off the Mittals will leave Arcelor and a new chief executive officer will be named. CEO Guy Dollé, 63, will “help” his designated successor into his role, chairman Kinsch said.

 

Dollé had sought to repel Mittal by agreeing to buy most of Russia-based Severstal from Aleksei Mordashov, which would have created a steelmaker bigger than Mittal.

 

But “shareholders in Arcelor have become very vocal” against the Severstal deal, said Stephen Pope, head of equity research at Cantor Fitzgerald LP in London. “That is probably what lanced the boil.”

 

With inputs from agencies