Is it possible for Warren Buffett to eventually acquire one or several of these companies?

Analysis of the Possibility of Buffett Acquiring the Big Five Trading Houses

Background

Warren Buffett, through Berkshire Hathaway, has invested in Japan's Big Five trading houses (Itochu, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation), holding approximately 8% to 9% of each company's shares. This investment began in 2020 and reflects Buffett’s long-term value investing strategy. He emphasizes that these companies possess stable cash flows, diversified businesses (e.g., energy, metals, food), and low valuations, aligning with his "buy-and-hold" philosophy. Currently, this remains a passive investment rather than a controlling acquisition.

Assessment of Acquisition Likelihood

The possibility of Buffett ultimately acquiring one or more of these companies is low but not entirely impossible. Key analysis points include:

• Buffett’s Investment Style:

  • Buffett prefers friendly mergers over hostile takeovers. He typically acquires entire companies (e.g., GEICO or BNSF Railway) but only if management cooperates and valuations are reasonable.
  • Regarding the Big Five, he has publicly stated this is a long-term holding, not a short-term arbitrage or acquisition play. Though Berkshire Hathaway’s stake is increasing, it remains well below the control threshold (typically >50%).

• Obstacles:

  • Scale and Complexity: The Big Five are pillars of Japan’s economy, with combined market capitalizations in the tens of billions of dollars and global operations. Acquiring even one would require massive capital (Berkshire holds ~$150 billion in cash, but acquiring multiple would deplete resources).
  • Regulatory and Cultural Hurdles: Japanese corporate culture emphasizes consensus and long-term relationships. Foreign acquisitions often face government scrutiny (e.g., antitrust laws). Historically, Japan has been cautious about foreign control of domestic giants.
  • Geopolitical and Market Factors: U.S.-China trade tensions and global economic uncertainty could complicate acquisitions. Buffett’s age (93) may also limit his involvement in large-scale deals.

• Favorable Factors:

  • If a trading house faces financial distress or strategic restructuring, Buffett might increase his stake toward acquisition. For example, he gradually acquired Apple shares, though the keiretsu (cross-shareholding) structure of the Big Five complicates full takeovers.
  • Buffett’s successor (e.g., Greg Abel) could continue his strategy. If opportunities arise (e.g., steep stock declines), an acquisition is not impossible.

Conclusion

Overall, the probability of Buffett acquiring one or more of the Big Five trading houses remains low. He is more likely to maintain current holdings as part of a diversified portfolio. His strategy prioritizes patience and value over aggressive expansion. While market shifts (e.g., recession-induced low valuations) could slightly increase the possibility, his track record suggests this is a long-term investment rather than a takeover target. Investors should monitor Berkshire’s annual reports and Buffett’s shareholder letters for updates.