Buffett Defends AmEx CEO's Decision to End Costco Deal -CNBC
03 May 2016 - 12:23AM
Dow Jones News
Investor Warren Buffett on Monday defended American Express Co.
(AXP) Chief Executive Officer Kenneth Chenault's decision last year
to end the credit card company's 16-year relationship with Costco
Wholesale Corp. (COST).
Mr. Buffett, in an interview on CNBC, said the loss of the
Costco account "was a significant item," but said he was aware of
the financial details involved in the negotiations and agreed with
Mr. Chenault.
"I concur entirely with (AmEx) walking away" from the Costco
business, said Mr. Buffett, the chief executive at Berkshire
Hathaway Inc. (BRKA, BRKB). "You have to be able to walk away from
an acquisition. You have to be able to walk away from a business
deal.
"It may be very tough sometimes, but if you aren't willing to
walk away, you're going to get pushed around pretty dramatically,"
he said.
However, Charlie Munger, Berkshire's vice chairman as well as a
board member at Costco, had a different opinion on the AmEx
decision regarding Costco.
"I would have made the opposite decision," Mr. Munger said of
the AmEx choice. "Costco is so powerful," he explained to CNBC,
"they (AmEx) should have thrown away the rule book. But that's just
my opinion."
For his part, Mr. Buffett said AmEx has a "very strong
franchise" with the amount of dollars spend per AmEx card far
higher than that of Visa Inc. (V) or MasterCard Inc. (MA). "I feel
good about it."
CNBC website: www.cnbc.com/
Write to nymonitoring@dowjones.com
(END) Dow Jones Newswires
May 02, 2016 10:08 ET (14:08 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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