DaVita Gains as Berkshire Pact Seen as Possible Deal PathNoah Buhayar
DaVita HealthCare Partners Inc. rallied the most since 2009 after signing an agreement that was seen as setting a path for Warren Buffett’s Berkshire Hathaway Inc. to negotiate for a possible takeover.
DaVita jumped 10 percent to $129.37 today in New York. The Denver-based company said late yesterday that Berkshire, with a stake of about 14 percent, approached about the possibility of increasing its holding.
Berkshire agreed, if its stake passes 15 percent, to refrain from proposing a merger without consent from DaVita, according to a document signed by both companies yesterday. Such so-called standstill agreements are typically arranged by companies to prevent an unsolicited takeover.
“Berkshire’s just not known for making hostile takeovers,” Michael A. Mazzeo, an associate professor of finance at Michigan State University, said in a phone interview yesterday. “They make friendly ones. And so, this might be a way of simply beginning that dialogue.”
Buffett didn’t return a message left with an assistant seeking comment. Berkshire’s holding was valued at more than $1.7 billion, based on yesterday’s closing price.
“Berkshire recently approached us about the option of increasing their holdings,” Kim Rivera, DaVita’s chief legal officer, said yesterday on a conference call that was scheduled to discuss DaVita’s quarterly results. “We found them to be a supportive investor with a long-term view.”
DaVita said yesterday that adjusted income from continuing operations was $1.84 a share in the three months ended March 31. That beat by 4 cents the average estimate of 10 analysts surveyed by Bloomberg.
The accord was signed by DaVita President Javier Rodriguez and Ted Weschler, the 51-year-old stock picker that Buffett hired to help oversee investments. DaVita was among the largest holdings at Weschler’s hedge fund before he joined Berkshire.
Peter Grauer, chairman of Bloomberg LP, the parent company of Bloomberg News, has served on DaVita’s board of directors since 1994.