Dear Ms. Carlburg:
Thanks for your letter of January 20.
I would make one suggestion in respect to the “structure” section. I don’t have a problem with Cascade not voting but it seems to me that a majority of the other minority shareholders voting at the meeting should decide the issue. Otherwise someone not voting is being treated as a “no” vote when that might not be their intention at all. If absent votes are treated as “no” votes, the will of the majority of non-Berkshire shareholders could easily be thwarted. Indifference is indifference, not negativity.
We would be unable to make the adjustments you describe in the “value” section. The GAAP book value represents the maximum amount that Berkshire will pay for the minority shares. Even at that price we regard the transaction as disadvantageous to Berkshire if a substantial number of Wesco shareholders elect to take Berkshire stock. That’s because I believe the prospects for Berkshire shares over the next ten years to be considerably better than the prospects for Wesco shares considering the economic prospects of the businesses each of the companies own.
Of course, I may be wrong in my assessment of the prospects for Berkshire, Wesco or both. But since I feel that the shareholders of Berkshire will be economically disadvantaged by the shareholders of Wesco who take Berkshire shares, I’m unable to change the terms of our offer.
If our offer is unacceptable, I would suggest that all work in respect to our proposal should be terminated immediately so as to avoid incurring any further expenses.
Thank you for your consideration of our offer.
/s/ Warren E. Buffett
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