The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [231]
As Peters’s frustration grew, she pushed for a merger. She knew the Santa Barbara offer wasn’t great, but all of the company’s executives were in their mid-forties and they were bright and aggressive. Although they hung around the country club too much for her taste, they were vigorous, acquiring branches and doing things that she thought should be done.
Blue Chip already owned eight percent of Wesco when the merger was announced. Munger thought that if it kept buying Wesco, it could accumulate enough stock to defeat the Santa Barbara deal. But then he discovered that it would take fifty percent of the stock, a much higher obstacle. Munger had a greater incentive than Buffett to keep going, since Blue Chip was his partnership’s most important investment. He urged going ahead; Buffett thought fifty percent was too high a threshold and held back. 15
Soon thereafter, Munger went to see Wesco’s CEO, Louis Vincenti, and tried to persuade him to abandon the Santa Barbara deal.16 And Vincenti brushed Munger off like a flake of dandruff—not an easy thing to do.
Munger and Buffett had no intention of launching a competing hostile bid, however. Further, Munger could not imagine that such a thing might be necessary. He wrote Vincenti, appealing to his higher values.17 Surely his superior reasoning could bring Vincenti around. It was wrong that Wesco should sell itself too cheap; Vincenti should simply see that. So Munger told Vincenti that he liked Wesco’s management and that Vincenti was Buffett and Munger’s sort of fellow. He told Vincenti something like, “You’re engaged to this other girl, so we can’t talk to you, but if you were free, you’re the kind of man we would like.”18
Munger’s old-fashioned, Ben Franklinesque sense of ethics and his noblesse oblige notion that gentlemen in business should agree upon the right conduct among themselves must have sounded like Sanskrit to Vincenti. But at least Vincenti did let slip that Betty Peters was the shareholder pushing for the merger.
Munger sent Don Koeppel, CEO of Blue Chip, down to see Peters. She viewed him as a minion and sent him back empty-handed.19 So it was time for the big gun. Within ten minutes of Koeppel’s departure, Buffett called her. Peters had just finished reading the chapter on him in Jerry Goodman’s Supermoney, which her husband had given her for Christmas. “Are you the same Warren Buffett that’s in Supermoney?” she asked. Buffett admitted that he was the man who, according to Jerry Goodman, represented the triumph of straight thinking and high standards over flapdoodle, folly, and flimflam. Peters willingly agreed to meet Buffett with her three children at the TWA Ambassador Lounge at the San Francisco airport twenty-four hours later.
At the meeting, Buffett, with Pepsi in hand, underplayed his talent and record while asking questions in a warm, unthreatening manner. They talked for three hours, mostly about Omaha, where Peters’s mother had grown up. They talked about politics. Peters, a lifelong Democrat, was pleased by Buffett’s views. Finally he said, with considerable understatement, “Betty, I think I can do better with Wesco than this merger. Inasmuch as you’re giving up the company, why don’t we give it a try?”
Peters was taken with Buffett and thought he might be right about doing better than the fast young men from Santa Barbara. In fact, her concern now became that something might happen to Buffett if she swung her vote to him. He told her he had a partner, however, someone who would be in charge of Berkshire and the Buffett family’s stockholdings if the proverbial truck mowed him down.
On her next trip to Pasadena, Peters sat down to breakfast with Buffett and Munger at the grand old Huntington Hotel so that she could get to know this mysterious partner. The two of them asked for a meeting with the Wesco board. Peters then did something brave, allowing herself to look capricious